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- Managing Debt and deficit financing as the government's banker central bank must ensure that governments have the ability to meet the deficit spending.
Let's shelve the government ability may borrow from outside, there are two ways finance borrowing needs of the public. First, the government could borrow from the local population and by selling financial securities, promissory notes and government bonds to the public. This is done as follows. The government sold the securities to the bank for cash compensation for the deficit. in turn, the central bank conducted an open market operation to sell these securities in the open market to get money mat.Khi process ends people hold these securities in the hands of the government but profitable supply major currencies unchanged. Second, the government can finance the deficit by printing money the government actually selling stock pipe for central banks for cash to cover expenses exceeded taxes.
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