Question

What is deficit financing?

a. The nation is making more money than it spends.
c. The nation is making less money than it is spending requiring the government to borrow money.
b. The nation is balanced in the budget.
d. The nation is printing more money so they can balance the budget.

Answer 1

Deficit financing:

c. The nation is making less money than it is spending requiring the government to borrow money.

Deficit financing is spending more money than it is receiving as revenue. The difference is made up by borrowing or minting new money.