Which of the following best describes the effect of printing money to finance government expenditures on the economy?
A)Printing money causes the value of money to rise.
B)Printing money imposes a tax on everyone who holds money.
C)Printing money is the principle method by which the Canadian government finances its expenditures.
D)Printing money causes the nominal interest rate to decrease.

Question

Quizplus · Accepted Answer

Printing money to finance government expenditures can lead to inflation, which reduces the purchasing power of money, effectively acting as a tax on those who hold money.

Which of the Following Best Describes the Effect of Printing