The government's practice of spending more than it takes in results in:
a. greater dependence on regressive taxes than progressive taxes.
b. deficit financing
c. low interest rates
d. longer fiscal years
I think it's B?
Right, again!
Thanks!
You're welcome.
Yes, you are correct! The government's practice of spending more than it takes in is referred to as deficit financing. This occurs when the government's expenditures exceed its revenue, leading to a budget deficit. To cover this deficit, the government often borrows money by issuing bonds or other forms of debt, which is known as deficit financing.
Deficit financing can have various consequences, including the accumulation of public debt, which needs to be serviced in the future, potentially leading to increased interest payments. It can also impact the overall economy by increasing liquidity and potentially leading to inflationary pressures.
Therefore, option b. deficit financing is the correct answer to the question.