Question

fiscal deficit leads to price spiral . explain​

Answer 1

Answer:

fiscal deficit increases the money supply in the economy as government borrowing increses

Answer 2

The statement is true that fiscal deficit leads to  price spinal

Explanation:

• due to price spiral there is a type of inflation known as the spiral inflation. According to the laws of economics there has been more borrowing by the government. As a result of this there has been more amount of money that has been introduced.
• As a result of this the the money in the hands of the general people also increases. This leads to increase in the consumption of goods.
• it leads to wage push inflation. This actually leads to the price spiral in case of fiscal deficit

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