When (if at all) are budget deficits inflationary?
A)when AS is perfectly horizontal
B)when AS has a very steep slope
C)when AS has a downward slope
D)when AS intersects AD

Question

When (if at all) are budget deficits inflationary?
A)when AS is perfectly horizontal 
B)when AS has a very steep slope 
C)when AS has a downward slope 
D)when AS intersects AD

Quizplus · Accepted Answer

Budget deficits can be inflationary when aggregate supply (AS) has a very steep slope, indicating that the economy is near or at full capacity, leading to increased prices rather than output.

When (If at All) Are Budget Deficits Inflationary