Question

Public debt (public borrowing) as an instrument of fiscal policy refers to:

Options

• Levying taxes on goods and services

• Lending by the government to private firms

• Issuing currency to finance the deficit

• Borrowing by the government from the public

Answer 1

Public debt (public borrowing) means borrowing by the government from the public. It is a revenue instrument of fiscal policy, distinct from deficit financing (currency issuance) and taxation.