Central banks in most developing countries:
A)do not recognize the link between money creation and inflation.
B)recognize the link between money creation and inflation but don't care about inflation.
C)recognize the link between money creation and inflation and exploit this link to reduce their budget deficit.
D)recognize the link between money creation and inflation but often have no other means of financing government expenditures than increasing the money supply.

Question

Quizplus · Accepted Answer

Central banks in developing countries often recognize the link between money creation and inflation but may resort to increasing the money supply as a means to finance government expenditures due to limited access to other financing options.

Central Banks in Most Developing Countries