Assume that the economy is at full employment and that the federal government needs to borrow $100

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Assume that the economy is at full employment and that the federal government needs to borrow $100 billion to finance a budget deficit. Should the Federal Reserve monetize the debt by putting an extra $100 billion in reserves into the system to finance this borrowing?

If not, what action should the Fed take?

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Economics Theory And Practice

ISBN: 9781118949733

11th Edition

Authors: Patrick J. Welch, Gerry F. Welch

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