A large annual increase in the federal debt can lead to inflationary pressure if

Question

A large annual increase in the federal debt can lead to inflationary pressure if:
the total debt exceeds 50 percent of the nation's GDP. business leaders are so concerned about the debt that they cut back investment expenditures. the government attempts to liquidate the debt rapidly by increasing tax rates and cutting back government expenditures. the debt leads the nation's central bank to maintain low interest rates when a more restrictive monetary policy is appropriate. A large annual increase in the federal debt can lead to inflationary pressure if:
the total debt exceeds 50 percent of the nation's GDP. business leaders are so concerned about the debt that they cut back investment expenditures. the government attempts to liquidate the debt rapidly by increasing tax rates and cutting back government expenditures. the debt leads the nation's central bank to maintain low interest rates when a more restrictive monetary policy is appropriate. the total debt exceeds 50 percent of the nation's GDP. business leaders are so concerned about the debt that they cut back investment expenditures. the government attempts to liquidate the debt rapidly by increasing tax rates and cutting back government expenditures. the debt leads the nation's central bank to maintain low interest rates when a more restrictive monetary policy is appropriate. the total debt exceeds 50 percent of the nation's GDP.

Explanation / Answer

Answer: the debt leads the nation's central bank to maintain low interest rates when a more restrictive monetary policy is appropriate.

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