Question

3. What is deficit spending?

A. When a nation gives tax credits to encourage business investment in new factory equipment

B. when a nation increases military spending to create new jobs and boost the economy

C. when a nation cuts the taxes of wealthier citizens while increasing the tax burden on the middle class

D. when a nation borrows money in order to spend more than is received in taxes

Answer 1

The correct answer is D. Deficit spending is, for example, when a nation borrows money in order to spend more than is received in taxes.

Step-by-step explanation:

Basically, the public spending deficit is the situation whereby the government, in its budget, has more expenses than income. In this way, the income from taxes does not cover all of the government's expenditures, with which the government must cover the remaining sums of money through loans (taking on debt), or through higher taxes, or even issuing money. In all cases, public deficit is a negative situation for the economy of a country since it implies a situation for which there is a lack of money by the government.