Deficit spending occurs when a government spends more money than it collects in revenue, leading to a budget deficit. This often involves borrowing funds, typically through issuing bonds, to cover the shortfall. Governments may engage in deficit spending to stimulate economic growth, especially during recessions, by funding public projects or social programs. While deficit spending can boost the economy in the short term, it can also lead to increased national debt over time. If a government consistently spends beyond its means, it may face challenges in repaying its obligations, which can affect its credit rating and economic stability.