The most likely explanation for why the U.S. government was not worried about the growth in deficits caused by expansionary policy was they:
A)wanted inflation to occur in order to wipe out the value of government debt.
B)knew they could pass significant tax increases to manage the deficit.
C)expected that the economy would grow out of the deficit.
D)wanted to make the dollar exchange rate favorable compared to the Yuan.

Question

Quizplus · Accepted Answer

The U.S. government likely believed that by implementing expansionary policies, the resulting economic growth would increase tax revenues and reduce the deficit over time, without the need for immediate intervention. This approach relies on the idea that a growing economy will naturally lead to a decrease in the deficit as a percentage of GDP.

The Most Likely Explanation for Why the U