Issuing money to finance budget deficits:
A)increases the resources consumed by both the government and the private sector.
B)increases the resources consumed by the government but does not change the resources consumed by the private sector.
C)increases the resources consumed by the government and thereby leaves fewer resources for the private sector.
D)does not increase the resources consumed by either the government or the private sector.

Question

Quizplus · Accepted Answer

Issuing money to finance budget deficits allows the government to spend more without immediately raising taxes or borrowing from the public, which increases the resources consumed by the government. This increased government spending can lead to higher demand for goods and services, potentially raising prices (inflation) and crowding out private sector investment, thereby leaving fewer resources available for the private sector.

Issuing Money to Finance Budget Deficits