fiscal policy - printing money (1 Viewer)

[jky.]

- if an economy is running a budget deficit, and it finances it by 'printing more money', why would this create a situation where inflation may accerlerate?

 

[ToO LaZy ^*]

printing more money will lead in an increase in supply of cash-> an increase in supply will lead to falling interest rates (from the laws of supply and demand) -> demand will rise for money since interest rates are low -> the economy may overheat due to strong aggregate demand and strong growth thus will lead to inflationary pressures -> increased demand for money will cause interest rates to rise and prices to rise (inflation sets in)

 

[Wild Dan Hibiki]

woah good answer
LOL

 

[*Pooja*]

inflation is a situation where there is 'too much money chasing too few goods' (samuelson).

 

[santaslayer]

LoLz, I think Pauline Hanson was asked an economic problem and her answer was to print off more money. What an idiot.

 

[Wild Dan Hibiki]

pauline hanson sux

 

[masteraal]

im confused....please explain....haha stupid bitch...why cant she stay in jail...whoops i mean goal.