Question

The United States government spends more than it earns in tax revenues. How does the government

fund this additional spending?

Answer 1

When the federal government spends more money than it receives in taxes in a given year, it runs a budget deficit. Conversely, when the government receives more money in taxes than it spends in a year, it runs a budget surplus. If government spending and taxes are equal, it is said to have a balanced budget.