What happens to the monetary base and the money supply if the government finances a fiscal deficit

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What happens to the monetary base and the money supply if the government finances a fiscal deficit by:

(a) selling bonds to the public;

(b) selling bonds to the commercial banks;

(c) selling bonds to the central bank;

(d) selling bonds to foreigners.

If any of these changes the money supply, what policies should the central bank adopt to offset these changes?

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Monetary Economics

ISBN: 9780415772099

2nd Edition

Authors: Jagdish Handa

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Question Posted: Nov 12, 2024 03:00 AM

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What happens to the monetary base and the money supply if the government finances a fiscal deficit

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Monetary Economics

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