Deficit Financing Meaning

Deficit financing is the term which is applicable to government financing, government uses this source when it runs out of funds. Typically a government receives revenues in the form of direct and indirect taxes and it spends that money by granting money to various projects like infrastructure spending, giving subsidies to weaker section of society and so on. When the expenditure of government begins to exceed its revenues than it has no option but resort to borrowing from markets or printing more money.

Deficit financing may happen either due to bureaucratic inefficiency like tax evasions by corporate and individuals, corruption leading to policy paralysis or in case of economy suffering from recession it is used to stimulate the economy of the country though it results in increased inflationary pressure for an economy.

0 comments… add one

Leave a Comment

Related pages

disadvantage of payback perioddisadvantages of direct investmentadvantages of denormalizationdeferred revenue journal entryan example of deferred revenue is unearned rentwikipedia in hindi narendra modiwhen is the trial balance preparedpenetration pricing strategydifference between accounts payable and bills payablepenetration and skimming pricingdisadvantages of a mixed economic systemaccounting concept going concernbarder and tradediminishing law of returnssocial media advertising advantages and disadvantagesadvantage of a mixed economyfeatures of monopoly in economicspenetration marketing strategycurrent asset turnover ratioloan tenure meaningwhat is ecs in bankingexamples of elastic demand goodspush inflationwhat is cost concept in accountingdirect quotation to indirect quotationadvantages and disadvantages of housing financeadvantages of dupont analysisdebentures in hindidifference between current ratio and quick ratiocarriage inward meaningbenefit of ppfwhat is lifo methodcharacteristics of socialist economyeconomics traditional economyfull form of ipoadvantages and disadvantages of demographic segmentationdividend wikipedianostro account definitionswot stands forhypothicationwhere is unearned revenue recordedfactoring advantages and disadvantagesoutstanding salary journal entrymarket skimming price strategyinternet merits and demeritsexamples of normal goodshorizontal m&aslr and crrwhat is conservatism conceptdifference between capitalism and mixed economydupont system roeconcept of conservatismdiff between cash flow and fund flowauthoritarian leadership characteristicspure conglomerate mergerdurable and nondurable productsadvantages and disadvantages of advertisementstypes of cheque crossingwhy do companies do a reverse stock splitadvantages and disadvantages of carbon creditsdisadvantages of cost accountingfeatures of decentralisationvertical analysis of financial statementdupont analysis formulaprovision accounting entriesincome effect substitution effectdisadvantages of price skimmingdefinition of proprietorsexamples of period costsadvantages of dupont analysisorder and bearer chequemonopoly tutor2unondurable goods examplesdifference between capital and drawingscapm model assumptions