What do the media generally mean when they use the phrase "printing money" in relation to the financing of the federal budget deficit?
A)The Treasury printing currency, rather than relying on tax revenue, to finance federal spending
B)The Federal Reserve printing currency and sending it to the Treasury for use in financing federal spending
C)The bank and nonbank public purchasing Treasury securities
D)The Federal Reserve purchasing Treasury securities

Question

Quizplus · Accepted Answer

When the media uses the phrase "printing money" in relation to the financing of the federal budget deficit, they generally mean that the Federal Reserve is engaging in open market operations and purchasing Treasury securities. This increases the money supply and can be viewed as indirectly financing the deficit by providing the Treasury with additional funds from the purchase of those securities. However, it is important to note that this process does not involve the literal printing of new physical currency.

What Do the Media Generally Mean When They Use the Phrase