ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It means the government spends less and taxes more
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Monetizing the debt is another way of saying that the government is charging interest on anyone who owes taxes.
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creating (printing) just enough (not so much to cause inflation) extra money to offset deficit spending in order to prevent interest rates from changing.
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to monetize means to make money so it is a form of selling the national debt at a profit.
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Detailed explanation-1: -A government deficit is said to be monetised when the central bank buys bonds issued by the government to cover its deficit. Due to the identity of a central bank’s balance sheet, such purchases increase a bank’s reserves unless other transactions offset them.
Detailed explanation-2: -The best example of debt monetization is a large, one-time increase in high-powered money, which the central bank uses to purchase interest-bearing government bonds. High-powered money is base money that pays no interest, such as currency and zero interest bank reserves.
Detailed explanation-3: -Debt monetization or monetary financing is the practice of a government borrowing money from the central bank to finance public spending instead of selling bonds to private investors or raising taxes.
Detailed explanation-4: -What Does Monetization Mean? Monetization literally means to convert something into money. In practice, this means turning things into revenue-generating activities, services, or assets.