When the Budget Deficit Is Financed Entirely Through Money Creation

question 61

Multiple Choice

When the budget deficit is financed entirely through money creation, the real budget deficit is equal to which of the following?

• A) OH.
• B) P(OH/H).
• C) OH/OP.
• D) OH/P.
• E) OH/H.

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Definitions:

Invested Cash

Funds that are placed into a business by its owners or shareholders with the expectation of generating profits or income.

Capital

The financial resources or assets owned by an individual or business, often used to generate income or produce goods and services.

Withdrawals

Funds taken out of a business by the owners for personal use.

Liability Account

An accounting record that captures the amounts a company owes to creditors or suppliers.