Suppose that the Government of Canada unexpectedly decided to pay off its debt by printing new money.Which of the following would happen?
A)People who held money would feel richer.
B)Prices who held government bonds would feel richer.
C)People who lent money at a fixed interest rate would feel richer.
D)People who borrowed money at a fixed interest rate would feel richer.

Question

Quizplus · Accepted Answer

Printing new money would likely lead to inflation, decreasing the real value of money. Borrowers at a fixed interest rate would benefit because they would repay their loans with money that is worth less than when they borrowed it.

Suppose That the Government of Canada Unexpectedly Decided to Pay