What does "deficit financing" involve?

Deficit financing involves borrowing funds to cover expenditures. This financial strategy is typically employed when an entity, such as a school district or government, needs to spend more than the revenue it currently has available. By borrowing, the entity can meet its immediate financial obligations and fund necessary services or projects even in the absence of sufficient current income. This enables continued operation and investment while managing short-term financial deficiencies.

The other choices represent different financing strategies or objectives, such as using existing revenue to manage current needs or generating excess revenue for future investments. However, these do not align with the concept of deficit financing, which specifically focuses on borrowing to fill a gap in funding.