Deficit financing refers to the practice by a government agency of borrowing funds to cover a revenue shortfall. While this method can stimulate the economy in the short term, prolonged deficit financing may drive up interest rates and eventually slow economic growth.
National debt refers to the total amount of money that the federal government owes to creditors due to borrowing. It consists of various debt instruments such as Treasury bills, Treasury notes, and Treasury bonds. The interest on the national debt is a significant part of the federal government's annual expenses.
The Public Sector Borrowing Requirement (PSBR) refers to the amount of money the government needs to borrow to cover its expenditures if these exceed its income. It serves as an economic indicator tracking the difference between government expenditures and income from taxes and other revenue streams, typically over a fiscal year.
Public Sector Net Cash Requirement (PSNCR) refers to the amount of money that the government needs to borrow in a specified period to meet its expenditures and obligations, after accounting for its income.
