Budget deficits can be an important source of ________ monetary policy.
A) inflationary
B) recessionary
C) federal
D) fiscal

Question

Quizplus · Accepted Answer

Budget deficits can be an important source of inflationary monetary policy because when the government spends more money than it brings in, it often finances the deficit by printing more money. This increases the supply of money in circulation, which can lead to inflation as the increased money supply reduces the value of each unit of currency. Additionally, the government may be more likely to pursue inflationary monetary policies, such as lowering interest rates, to stimulate economic growth if it is faced with a budget deficit.

Budget Deficits Can Be an Important Source of ________ Monetary