USA HISTORY

Detailed explanation-1: -deficit financing, practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds.

Detailed explanation-2: -When a government spends more than it collects in taxes, it is said to have a budget deficit. When a government collects more in taxes than it spends, it is said to have a budget surplus. If government spending and taxes are equal, it is said to have a balanced budget.

Detailed explanation-3: -A deficit occurs when the federal government’s spending exceeds its revenues. The federal government has spent $460 billion more than it has collected in fiscal year (FY) 2023, resulting in a national deficit.

Detailed explanation-4: -When the government runs a budget deficit, it is spending more than it is taking in. In this way, national savings decreases. When national savings decreases, investment–the primary store of national savings–also decreases. Lower investment leads to lower long-term economic growth.

Detailed explanation-5: -A budget deficit may be used to finance an expansionary fiscal policy, which involves lowering income and corporate taxes (therefore reducing revenue for the government) and increasing government spending on infrastructure and investments to attract foreign capital and boost economic growth.