A budget deficit has its inflationary impact reduced by

Question

Quizplus · Accepted Answer

Borrowing from the public to finance a budget deficit can reduce its inflationary impact because it withdraws excess money from the economy, which might otherwise increase demand and lead to inflation. Choices B and C typically add more money into circulation, increasing inflationary pressures, while D can increase demand and potentially inflation. E is a result of borrowing and does not directly impact inflation in the context of this question.

A Budget Deficit Has Its Inflationary Impact Reduced by