The willingness of people around the world to use and hold U.S. dollars allows the U.S. government to increase the money supply without the immediate risk of inflation.

Question

Quizplus · Accepted Answer

This is because the demand for U.S. dollars creates a global market for the currency, which allows the U.S. government to issue more currency without causing inflation, as long as the demand for the dollar remains relatively high. This is because people are willing to hold and use U.S. dollars for transactions, investments, and reserves, which keeps the value of the currency relatively stable.

The Willingness of People Around the World to Use and Hold