If the Treasury is compelled by a sizable budget deficit to borrow funds from the nonbank public, all of the following effects are likely except one. Which effect is not likely to happen?

Question

Quizplus · Accepted Answer

When the Treasury borrows from the nonbank public, it does not directly increase the money supply. The money supply would typically increase through actions by the central bank, such as purchasing government securities, not through government borrowing from the public.

If the Treasury Is Compelled by a Sizable Budget Deficit