WORLD 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: -Understanding Budget Deficits A budget deficit can lead to higher levels of borrowing, higher interest payments, and low reinvestment, which will result in lower revenue during the following year.

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.