Question

Why do governments sometimes pay for their spending by printing more money? Why do economists refer...

Why do governments sometimes pay for their spending by printing more money? Why do economists refer to this as an ‘inflation tax” that can result in very harmful results?

must be at least 250 words

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When there is no source for the government to borrow the money to pay for the spendings, then, in that case, the government knocks the door of the central bank, and the central bank of the economy provides the funds to the government by printing more money. When central bank prints more money it will increase the money supply, and it will lead to inflation in the economy that is why economist refer to this as inflation tax, and this can be harmful to the economy because it will lead to an increase in the overall price level in the marketplace. It may hurt the central bank's target of controlling inflation.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why do governments sometimes pay for their spending by printing more money? Why do economists refer...
Why do governments sometimes pay for their spending by printing more money? Why do economists refer to this as an ‘inflation tax” that can result in very harmful results?
Why do governments sometimes pay for their spending by printing more money? Why do economists refer...
Why do governments sometimes pay for their spending by printing more money? Why do economists refer to this as an ‘inflation tax” that can result in very harmful results?
Why do governments borrow money and pay interest when they could print all the interest-free money...
Why do governments borrow money and pay interest when they could print all the interest-free money they need themselves?
Do you think there is a real threat that the US might resort to printing money...
Do you think there is a real threat that the US might resort to printing money if tax revenue would become insufficient to cover the desired spending by the government? Why or why not?
Explain why special items are sometimes referred to as “one-shot” revenues. Why are they not reported...
Explain why special items are sometimes referred to as “one-shot” revenues. Why are they not reported with other revenues? Review 10 governments’ General Fund financial statements from the Internet or other sources. Do they report special items? If so, identify the government and explain the nature and amount of each special item. DO NOT PLAGIARIZE POST MUST BE AT LEAST 2OO WORDS
Intermediate Macroeconomics HW 7 2. Why do we call the money creation policy an inflation tax?...
Intermediate Macroeconomics HW 7 2. Why do we call the money creation policy an inflation tax? Who bears the burden of the tax? 3. Explain how an increase in the money growth rate can, for example, increase the equilibrium level of output.
Why, exactly, would Gaddafi have resorted to the printing press in early 2011? Info People sometimes...
Why, exactly, would Gaddafi have resorted to the printing press in early 2011? Info People sometimes talk about profitable companies as having a “license to print money.” Well, the British firm De La Rue actually does. In 1930, De La Rue, printer of items such as postage stamps, expanded into the money-printing business, producing banknotes for the then-government of China. Today it is the largest manufacturer of banknotes, producing the currencies of about 150 countries, from the United Kingdom to...
How can a government obtain revenue by printing money when someone else actually prints the money?...
How can a government obtain revenue by printing money when someone else actually prints the money? Info People sometimes talk about profitable companies as having a “license to print money.” Well, the British firm De La Rue actually does. In 1930, De La Rue, printer of items such as postage stamps, expanded into the money-printing business, producing banknotes for the then-government of China. Today it is the largest manufacturer of banknotes, producing the currencies of about 150 countries, from the...
Governments to get the economy out of recession or cool the economy down when the economy...
Governments to get the economy out of recession or cool the economy down when the economy is overheating often use fiscal policy.   1. What is fiscal policy?   2. How can it be used to get the economy out of recession? 3. How can it be used to get the economy out of the situation where the economy is in an expansionary period where we exceed long run potential?   4. Do both situations result on different impacts on inflation? Why or...
The United States federal government is responsible for meeting the spending obligations of the US government,...
The United States federal government is responsible for meeting the spending obligations of the US government, or its "unpaid bills." Krugman & Wells (2015), explained if taxes are insufficient to cover government spending then the federal government must borrow to cover the difference. These government borrowing are US Treasuries (Chapter 10, Matching Up Savings and Investment Spending). Reuters (2018, February 18) reported, “…tax reform is expected to add as much as $1.5 trillion to the federal debt load, while the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT