When the money supply increases by $5 billion, tax revenues are $10 billion, and government borrowing is $30 billion, government spending must equal:

Question

Quizplus · Accepted Answer

Government spending is financed by tax revenues, borrowing, and changes in the money supply. Therefore, government spending equals tax revenues ($10 billion) + government borrowing ($30 billion) + increase in money supply ($5 billion) = $45 billion.

When the Money Supply Increases by $5 Billion, Tax Revenues