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How does the government finance deficit spending ?

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Varshamittal029idn

The budget deficit is financed by the government. That is, there will be a deficit if government expenditure (G) exceeds tax collections (T), which can be covered by selling government bonds (by borrowing money).

  • Every deficit must be paid for. First, this is accomplished by selling government securities like Treasury bonds (T-bonds). Treasury bonds are bought by people, companies, and other governments, and they are used as collateral for loans to the government.
  • The gap between the federal government's expenditures (also known as outlays) and its tax collections is used to determine the federal budget deficit for a given year (also known as revenue). When the government collects more revenue than it spends, there is no yearly deficit.

Thus this is how the government finance deficit is spent.

Refer here to learn more about deficit: https://brainly.com/question/26010226

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