Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 17 - Money Growth and Inflation - Quick Check Multiple Choice - Page 367: 4

Answer

b. deficit, expansion

Work Step by Step

When the government runs a large budget deficit and the central bank finances the government with a substantial monetary expansion (simply put, by printing more money), the increase in the money supply would result in a large increase in the price level and thus leads to hyperinflation
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