Question

If the government's expenditures exceeded its receipts, it would likely a. lend money to a bank or other financial intermediary. b. borrow money from a bank or other financial intermediary. c. buy bonds directly from the public. d. sell bonds directly to the public.

Answer 1

Answer:

The correct answer is option d.

Explanation:

If the government spending or expenditures are greater than its receipts. This means that the budget is in deficit. To balance the budget the government needs to increase its earnings.

In this situation, the government is likely to sell bonds directly to the public. The public will payback directly to the government. This will cause an increase in the government's earnings.

Buying bonds will reduce the money held by the government. Lending money to banks will also reduce the government's earnings.