Which Statement Best Describes the Effect of Printing Money to Finance

question 68

Multiple Choice

Which statement best describes the effect of printing money to finance government expenditures on the economy?

• A) Printing money causes the value of money to rise.
• B) Printing money imposes a tax on everyone who holds money.
• C) Printing money increases the real interest rate.
• D) Printing money lowers the velocity of money.

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Definitions:

Assets

Resources owned or controlled by a business, expected to produce future economic benefits.

Owner's Equity Statement

A financial statement showing the changes in the equity of a business entity over a period of time.

Revenues

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.