When a central bank buys the bonds of its government to pay for expenditures, it is said to _____ the debt.

Question

Quizplus · Accepted Answer

When a central bank buys government bonds to finance the government's expenditures, it is essentially converting debt into money supply, which is referred to as "monetizing" the debt. This process increases the amount of money in circulation, which can lead to inflation if not managed carefully.

When a Central Bank Buys the Bonds of Its Government