Which of the following is true regarding the effect of deficits from 1980 to 2005 in the United States?
A)They did not lead to substantial inflation because the Fed did not monetize the deficits.
B)They did not lead to substantial inflation because the Fed did monetize the deficits.
C)They led to substantial inflation because the Fed did not monetize the deficits.
D)They led to substantial inflation because the Fed did monetize the deficits.

Question

Quizplus · Accepted Answer

The passage states that the deficits from 1980 to 2005 did not lead to substantial inflation because the Fed did not monetize the deficits. Therefore, choice A is correct. Choices B, C, and D are incorrect because they either state that the deficits were monetized by the Fed (choice B and D) or that they still led to substantial inflation despite not being monetized (choice C).

Which of the Following Is True Regarding the Effect of Deficits