Paying for a government program by printing money:
A)reduces the opportunity cost of the program
B)is exactly like imposing an income tax to pay for the program
C)imposes an inflation tax to pay for the program
D)all of the above

Question

Quizplus · Accepted Answer

Paying for a government program by printing money may seem like an easy solution, but it ultimately leads to inflation. This means that the value of money decreases, causing prices to increase. Therefore, it is essentially like imposing an inflation tax on consumers to pay for the program. This also means that the opportunity cost of the program increases, as consumers have to pay higher prices for goods and services. Overall, option C is the best choice as it accurately describes the consequences of printing money to pay for a government program.

Paying for a Government Program by Printing Money