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5. Using money creation to pay for government spending Consider Snackistan, a hypothetical country that produces only burgers. In 2015, a burger is priced at
5. Using money creation to pay for government spending Consider Snackistan, a hypothetical country that produces only burgers. In 2015, a burger is priced at $4.00. Complete the first row of the table with the quantity of burgers that can be bought with $900. Note: In this problem, assume it is not possible to buy a fraction of a burger, and always round down to the nearest whole burger. Price of a Burger Burgers Bought with $900 Year ( Dollars) (Quantity ) 2015 4.00 2016 Suppose the government of Snackistan cannot raise sufficient tax revenues to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 20% by 2016. Assuming money neutrality holds, complete the second row of the table with the new price of a burger and the new quantity of burgers that can be bought with $900 in 2016. The impact of the government's decision to raise revenue by printing money is known as the
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