Question

When the government tries to meet the gap of public expenditure and public revenue through borrowing, it is called ____________.

• A. deficit financing
• B. debt financing
• C. credit financing
• D. none of the above

Answer 1

The correct option is A deficit financing

Deficit financing means filling the gap between government revenue and government expenditure in a government budget either by borrowing funds from central bank, i.e, public or printing currency. Deficit financing aims at matching the overall government expenditures with overall government revenue.