What Is the Only Factor That Can Continually Increase in Such

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The Answer is The only factor that can continually increase and bring about continued inflation is the money supply.One reason that government purchases cannot increase continually is that there are real and political limits to government spending.The real limit would be 100% of GDP (where all resources in the economy are devoted to producing goods and services for the government).The political limit would likely be less than 100% of GDP,but it is a limit nonetheless.Either way,there is an upper limit to the amount of government purchases,beyond which further such purchases cannot be made.The second reason for a limit to government purchases has to do with crowding out.As the government spends more,many economists believe that private sector spending falls as a result.This leads to little,or no,change in aggregate demand.

What Is the Only Factor That Can Continually Increase in Such

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