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Suppose That the Government Collects $500 in Taxes and Borrows

Question 122

Multiple Choice

Suppose that the government collects $500 in taxes and borrows $1000 from the public. If the government prints $200 in new money to finance its budget deficit, how large is the government deficit?


A) $1200
B) $1500
C) $1700
D) $700

Correct Answer:

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