Question #56
An ever expanding budget deficit is likely to be inflationary
- because it adds to bank reserves and thus allows them to extend more credit which results in too much money being in the system.
- when it increases nominal demand beyond the saving desire of the non-government sector.
- only if it is not accompanied by proportional increases in borrowing.
Answer #585
Answer: when it increases nominal demand beyond the saving desire of the non-government sector.
Explanation
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