6. Concerned about the crowding-out effects of government borrowing on private investment spending, a candidate for president argues that the United States should just print money to cover the government's budget deficit. What are the advantages and disadvantages of such a plan? Some items may be neither an advantage nor a disadvantage and should not be placed under either heading.

Question

Business

Henry Shaw

11 November, 01:15

6. Concerned about the crowding-out effects of government borrowing on private investment spending, a candidate for president argues that the United States should just print money to cover the government's budget deficit. What are the advantages and disadvantages of such a plan? Some items may be neither an advantage nor a disadvantage and should not be placed under either heading.

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Answers (1)

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Mackenzie Kelly · Answer 1

The overview of the specific issue is outlined in the following section on the explanation.

Explanation:

Mostly during the Great Recession, the crowding outside from private sector investment because of govt spending on financial services spending seemed to be disqualified. But because the economy is growing although interest rates are rising, government spending could theoretically build pressure on inflation.

The advantage and disadvantage of the above is given below.

Advantage:

Avoids the crowding out.

Disadvantage:

Growing unemployment or inflation.