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

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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.


Definitions:

Market Demand Curve

A graphical representation showing the relationship between the price of a good and the total amount of the good that all consumers are willing to purchase at each price level.

Willingness to Pay

The utmost price a consumer is ready to pay for a good or service, indicating its perceived value to them.

Consumer Surplus

The gap between the price consumers are ready to pay for a good or service and the price they actually pay.

Complements

Goods or services that are often used together, where the use or consumption of one enhances the use or consumption of the other.

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