Question

The president of the island nation of Winstone refuses to raise taxes, but wants to expand many government services and increase the size of Winstone's armed forces. He plans to pay for all of the desired expenditures by printing more money. If the president carries out his plan by rapidly increasing the supply of money, Winstone will likely experience:__________.

Answer 1

Answer:

An increase in the rate of inflation.

Explanation:

Inflation is a quantitative tool to measure the rise in the price of goods and services dues to an increase in production cost as there is a higher increase in the supply of money in the market. Higher supply of money leads the consumer to pay more price for goods and services.

In the given case, The president of the Island nation refuses to increase taxes, however, he wants to expand many government services and the size of armed forces. The president plans to pay for all of the desired expenditures by printing more money. By printing more money, there will be an increase in the supply of money, which is likely to increase the rate of inflation.