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Author Question: Do deficits lead to inflation? What will be an ideal response?[br][br][b][color=#FBB117]Question ... (Read 166 times)

09madisonrousseau09

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on: Jun 30, 2018
Do deficits lead to inflation?
 
  What will be an ideal response?

Question 2

There are ________ members of the FOMC.
 
  A) 5 B) 7 C) 12 D) 19
Macroeconomics: Principles, Applications and Tools ¦ O'Sullivan, Sheffrin, Perez ¦ 7th Edition
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hollysheppard095

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Governments can finance a deficit either by issuing bonds or creating new money. Some countries do not have to monetize the deficit, but if creating money is the only option then those deficits will inevitably cause inflation.

Answer to Question 2

C


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