Which term is the federal government's practice of spending more money than it takes in as revenues?

• A. Fiscal policy
• B. Monetary policy
• C. Deficit spending
• D. Entitlements

Answer: (C)

Deficit spending happens when the federal government spends more money in a given year than it brings in through taxes and other revenues. This is a central idea in fiscal policy, where the government uses spending and taxation to influence the economy. When a deficit occurs, the shortfall is usually financed by borrowing, which increases the national debt over time. Monetary policy, by contrast, focuses on the money supply and interest rates rather than annual budget outcomes, while entitlements refer to specific automatic programs like Social Security or Medicare. So the term that best captures spending more than revenue is deficit spending.