This method of financing government spending is frequently called printing money because high-powered money (the monetary base)is created in the process.
A)Financing government spending with taxes.
B)The finance of government spending through a Treasury sale of bonds that are then purchased by the Fed.
C)Financing government spending by selling bonds to the public,which pays for the bonds with currency.
D)Financing government spending by selling bonds to the public,which pays for the bonds with checks.

Question

Quizplus · Accepted Answer

When the government sells bonds to the public, they are purchased with currency from the public. The Fed then purchases these bonds from the public, effectively creating new money to finance government spending without physically printing new currency. This method is called open market operations.

This Method of Financing Government Spending Is Frequently Called Printing