Budgetary deficits must be financed by either taxation, borrowing or printing money. Governments have mostly relied on borrowing, giving rise to.......
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Government debt.
Government debt arises when the government borrows funds to finance budgetary deficits instead of increasing taxes or printing money. Over time, continued borrowing adds to the total public debt.