Printing money to meet government budget deficits ________.Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.aincreases the money supply in the economybincreases real incomecincreases the demand for moneydhelps combat inflationeNone of the above
Question
Printing money to meet government budget deficits ________.Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.aincreases the money supply in the economybincreases real incomecincreases the demand for moneydhelps combat inflationeNone of the above
Solution 1
The correct answer is "a. increases the money supply in the economy". When a government prints money to meet its budget deficits, it increases the total amount of money in circulation. This is because the government is creating new money to pay for its expenses, which adds to the existing money supply. However, it's important to note that while this can help the government meet its immediate financial needs, it can also lead to inflation if not managed properly.
Solution 2
The correct answer is "a. increases the money supply in the economy". When a government prints money to meet its budget deficits, it increases the total amount of money in circulation. This is because the government is creating new money, not moving existing money around within the economy. This increase in the money supply can lead to inflation if it outpaces economic growth.
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