USA HISTORY

Detailed explanation-1: -Deficit spending occurs when government spending exceeds its revenue. Deficit spending often refers to intentional excess spending meant to stimulate the economy. British economist John Maynard Keynes is the most well-known proponent of deficit spending as a form of economic stimulus.

Detailed explanation-2: -Policy tools for stimulating the economy include interest rate cuts, government spending increases, and quantitative easing. Policymakers generally direct stimulus programs toward key economic sectors to take advantage of multiplier effects that they hope will indirectly increase private sector spending.

Detailed explanation-3: -In essence, the theory is that government spending gives households additional income, which leads to increased consumer spending. That, in turn, leads to increased business revenues, production, capital expenditures, and employment, which further stimulates the economy.

Detailed explanation-4: -There are two sources to finance the fiscal deficit. They are: Borrowings: internally from a commercial bank, or from external sources like the IMF, other governments, etc. Deficit financing (that is, printing new currency): borrowing funds from RBI against its securities (so, RBI prints new currency).