Fiscal policy which results in a deficit will cause more inflation when it finances the deficit through

Question

Quizplus · Accepted Answer

Financing the deficit through the sale of treasury securities to the Federal Reserve increases the money supply in the economy, which leads to inflation. International currency exchange and the sale of treasury securities to individuals in the private sector do not directly increase the money supply and therefore have less impact on inflation.

Fiscal Policy Which Results in a Deficit Will Cause More