When a Government Has a Budget Deficit,it Must Issue (Sell)government

question 152

Essay

When a government has a budget deficit,it must issue (sell)government bonds to finance the deficit.Does it matter for the rate of inflation if the government sells the government bonds to the public or sells the government bonds to the central bank? Explain why it does or does not matter.

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Definitions:

Solvency

A company's ability to meet its long-term debts and financial obligations.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Net Income

The net income of a company once all costs and taxes are subtracted from its total revenues.

Solvency Measure

Financial metrics used to assess a company's ability to meet its long-term obligations and its financial stability.