Explain why government deficits in more troubled countries

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Reference no: EM1371189

Q. a) Explain why, despite governments' always financing their budget deficits by selling bonds, in some cases those deficits are in their effects are financed by printing money?

b) Explain why government deficits in more troubled countries, such as Zimbabwe or Iran, tend to produce more inflation than deficits in less-troubled countries, such as Japan or United States.

c) Explain why, despite Quantity theory implication that inflation rises one- for-one with growth rate of nominal money supply, in practice we observe that inflation rates tend to rise even more than one-for-one when annualized growth rates of nominal money supply are quite high, say above 50 percent.

Reference no: EM1371189

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