Which one of the following is likely to be the most inflationary in i...

UPSC Prelims 2013 Economy

Which one of the following is likely to be the most inflationary in its effect?

Explanation

Creating new money to finance a budget deficit will be the most inflationary effect. Because it increases the money supply without any increase in the production of goods and services.

Linked concepts

Revision pages for syllabus ideas tested in this PYQ.

Exchange Rate Management and its Economic Implications

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