Deficit Spending
The amount by which spending exceeds revenue
Real World Example
During the Great Depression, the U.S. government used deficit spending as part of The New Deal from 1933-1940 to stimulate the economy and create jobs. The idea was to spend more money than the government had in the short term to build infrastructure and provide relief for struggling Americans. This approach responded to the severe economic crisis and widespread unemployment of the time. Today, deficit spending remains important because governments use it to fund vital programs during economic downturns, like during the COVID-19 pandemic when many countries increased spending to support citizens and businesses. For example, if a government spends more on healthcare during a crisis, it might help your family access necessary medical services even if tax revenue is temporarily lower.
