What Will Happen If a Country Uses Money Creation to Finance

question 155

Multiple Choice

What will happen if a country uses money creation to finance a large and expanding national debt?

• A) Real output and employment will grow rapidly.
• B) Nominal interest rates will fall.
• C) The foreign exchange value of the currency will increase.
• D) The rate of inflation will rise.

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Definitions:

Resale Revenue

Income generated from selling a product or asset that was previously bought.

Recycling Revenue

Income generated from collecting, processing, and selling recyclable materials.

Processing Cost

The expenses associated with the operation of transforming raw materials into finished products.

Disposal Cost

The expense associated with getting rid of waste materials or unwanted products, including costs related to transportation, processing, and adherence to environmental regulations.