implications of deficit financing
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Borrowings are considered a better source as they do not increase the money supply which is regarded as the main cause of inflation. On the other hand, deficit financing may lead to inflationary trends in the economy due to more money supply.
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Explanation:
Deficit Financing (Printing of new currency):
Borrowings are considered a better source as they do not increase the money supply which is regarded as the main cause of inflation. On the other hand, deficit financing may lead to inflationary trends in the economy due to more money supply.
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