The effect of continued government deficit includes all of the following, EXCEPT a(n):
A) decrease in reserves.
B) increase in interest rates.
C) decrease in inflation.
D) rapid increase in domestic credit.

Question

Quizplus · Accepted Answer

Continued government deficit spending typically leads to an increase in inflation, as the government is injecting more money into the economy without a corresponding increase in goods and services. The other options listed are all potential negative consequences of continued government deficit spending.

The Effect of Continued Government Deficit Includes All of the Following