Why might a central bank choose to monetize the debt, knowing that it could lead to higher

Question:

Why might a central bank choose to monetize the debt, knowing that it could lead to higher inflation?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Economics of Money Banking and Financial Markets

ISBN: 978-0134733821

12th edition

Authors: Frederic S. Mishkin

See More Books

Question Posted: Nov 30, 2018 08:08 AM

See More Questions

The Federal Reserve Act of 2000 instructs the Fed to pursue its goals by maintaining] long- run growth of money and credit aggregates commensurate with the economys long-run potential to increase...
Adam Posen, then a member of the Bank of Englands Monetary Policy Committee, was characterized as arguing in a speech that: Central banks purchases of government debt far from undermining their...
An article in the Wall Street Journal about the policies of the Peoples Bank of China observes: Currency intervention expands the central banks balance sheet and adds to the money supply when left...
Based on the book values in the balance sheet of the company presented below, answer the following questions: Assets Liabilities and Shareholders Equity Asset (book value) $ 75 Debt $ 25 Equity $ 50...
When faced with labour shortages and high staff turnover, most retail stores do not bother with criminal record checks when hiring employees. Explain what internal control activity is missing from...
1. How many minutes, on average, does it take for a first edition patron to get the requested book from time of entry into the library? (State all assumptions and show the calculations.) 2. How many...
Why did Congress pass the Health Care Quality Improvement Act of 1986?
Analysis of Stockholders Equity The Stockholders Equity section of the December 31, 2010, balance sheet of Eldon Company appeared as follows: Preferred stock, $30 par value, 5,000 shares authorized,...
1. What is the best description of safety capacity? 2. If throughput is 20 per hour and the capacity is 30 per hour, what is the utilization? 3. What is the importance of safety capacity to a manager...
5. Write the following higher-order differential equations as equivalent systems of (first order) differential equations: (a) a" 2a" +5a' + 10x te2t (b) a" + 2x" + 5(a")3 + trr' + cos(x) = 1+ 12 Do...
Consider two central banks: one with a history of maintaining price stability and low inflation, and the other with a history of high inflation and poor inflation management. All else equal, if the...
Go to the St. Louis Federal Reserve FRED database and find data on the budget deficit (FYFSD), the amount of federal debt held by the public (FYGFDPUN), and the amount of federal debt held by the...
According to the U.S. Census Bureau, the relation between the average annual earnings of males and females with various levels of educational attainment can be modeled by the function F = 0.78M -...
Give One (1) example where electronic messages are allowed to be sent without the recipient's consent?
What if the scenario changed to 18 workers sharing 8 copiers, the company added 2 copiers, increased output by 90,000 pages per day, the company adds 5 more workers, and productivity increases to...
A survey asks a representative group of citizens, do you support a cleaner environment? This survey exhibits what pitfall: Sample bias Response bias Response accuracy No pitfall
Consider the Debt-Ceiling Deal in the USA economy and explain the relevance of any fiscal policy/ policies using an SRAS-AD-LRAS graph.
Why are contemporary organizations moving away from traditional on-the-job training methods to technology aided off-the-job training methods despite the costs associated with technology based...
Do you think that disclosures of smaller firms have more information content than disclosures for larger firms?
The following items were displayed in the statement of affairs for Lubbock Company: Fully secured liabilities ......... $90,000 Partially secured liabilities ....... 12,000 Unsecured liabilities...
Suppose that government policymakers decide that they will change taxes to raise aggregate output by $400 billion, and mpc = 0.5. By how much will taxes have to be changed?
If the point describing the combination of interest rate and aggregate output is not on either the IS or the LM curve, the economy will have no tendency to head toward the intersection of the...
If the point describing the combination of interest rate and aggregate output is not on either the IS or the LM curve, the economy will have no tendency to head toward the intersection of the...
A 1 kg metal block is heated to 200 C and then dropped into a thermally isolated container with 4 kg of water and 100 gr of ice both at a temperature of 0 C. If the specific heat of water is cw=4186...
Why are both ER Diagrams and Relational Modeling needed when a database system is developed?
Which data model provides a user with the best "program-data independence"? A. Hierarchial Model B. Network Model C. Relational Model D. Entity Relationship Model Why?

Why might a central bank choose to monetize the debt, knowing that it could lead to higher

Question:

Step by Step Answer:

If the government is running large deficits this could lead to high...View the full answer

Economics of Money Banking and Financial Markets

Students also viewed these Business questions