A federal budget deficit is financed by government issuance or sale of Treasury securities.
When a government’s revenue are less is less than its expenditure, the government is said to have a deficit. If a government runs a budget deficit, the government would have to borrow to fund its budget. Thus, as budget deficit increases, borrowing and debt would increase.
One of the ways the government can finance its budget deficit is by issuing treasury securities. When treasury securities are issued, members of the public pay the government to have access to them. This is a source of revenue.
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The financing of a federal budget deficit is usually by B. government issuance or sale of Treasury securities.
A federal budget deficit means that the government budgeted expenditure exceeds its planned revenue. The difference between these two budget heads is called a budget deficit and is financed by borrowing.
Thus, the federal government finances its budget deficit by issuing treasury securities like bonds.
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