Question

Government is typically a​ ________.

a. net provider of funds because it can print money at will
b. net demander of funds because it saves more than it borrows
c. net provider of funds because it borrows more than it saves
d. net demander of funds because it borrows more than it saves

Answer 1

Answer: D. net demander of funds because it borrows more than it saves

The government incurs more debts than gain profits as shown by most financial reports. The government is viewed similarly to that of business firms being net demanders by loaning huge amounts to financial institutions indirectly. The indirect borrowing done by government is done through debt security selling.