BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

Solutions

Chapter
Section
BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Hyperinflations occur when the government runs a large budget _________, which the central bank finances with a substantial monetary___________.

a. deficit, contraction

b. deficit, expansion

c. surplus, contraction

d. surplus, expansion

To determine

Cause of hyperinflation.

Explanation

Option (b):

Almost all hyperinflations follow the same pattern where the government has a high level of spending and inadequate tax revenue to pay for its spending. As a result, the government turns to printing money to pay for its spending. Thus, hyperinflation occurs when it has a large budget deficit and central bank finances through monetary expansions. Thus, option ‘b’ is correct.

Option (a):

To pay for spending of the government, the central government finances through monetary expansion such as printing money...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the various forms of business organization? What are the advantages and disadvantages of each?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

What are the four most common bases for departmentalization?

Foundations of Business (MindTap Course List)

Distinguish internal and external entities.

Accounting Information Systems

YIELD TO MATURITY AND FUTURE PRICE A bond has a 1,000 par value, 10 years to maturity, and a 7% annual coupon a...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)