The use of deficit financing, the total cost of maintenance or effective demand was an important discovery of the economic depression of 1930. Today it is an important instrument in the bands of government to ensure a high level of economic activity. The definition of deficit financing is likely related to the purpose for which such a definition is necessary, vary. Deficit financing In a sense, through deficit financing, we intend to make excessive expenditures relative to its regular income through taxes, fees, and other sources. In this definition, if such expenditures or by borrowing from the banking system, the budget deficit measures obtained. Deficit financing should be used when government expenditure exceeds its income. Deficit financing In underdeveloped countries, deficit financing can take two forms: a) difference between total revenues and expenditures b) the financing of deficits simply borrowing from the banking system of the country.