how does a country decide on the amount of money to be printed in a year.?

Question

whenever there is a deficit budget it is said the government decides to print currency. WHat will happen if the government decides to print the entire amount which is deficit in the budget.?

Answer 1

Countries typically appoint Economic specialists to watch for the health of the economy. This is a social science and the scientists are attempting to measure the "Operating Target" of the money.

The definition of the monetary base is total reserves plus currency held by the non bank public. The reserve equation can be altered quite easily to focus on the-monetary base; {Federal Reserve credit + gold stock + Treasury currency outstanding} less {Treasury cash holdings + Treasury foreign, and other deposits with the Federal Reserve Banks + Miscellaneous Federal Reserve liabilities and capital} = Monetary base (bank reserves + currency in circulation). <1>

Using this equation you can see that the effect would be inflation. By printing money, the supply of money is increases and it can only by half of what it once could. Therefore, the debt owed by the country also doubles, and you have a situation where the country is in high inflation. Historically, you can see what happened to Germany after WWI when they hit the inflation where they 'Printed Money' and the country's economy dropped leaving Germany in financial ruin (perfect for Hitler to take over).

Answer 2

US interior the previous had the economic business enterprise purely print as a lot funds because of the fact the gold they save interior the economic business enterprise at particular component, the storage of gold became huge and brought about upward thrust is gold costs, so as that they stopped the quantity of funds they print interior the international locations truly all be counted on the country's coverage. (government could reason inflation in the event that they decide for to, like what they did in germany after WW2) i might anticipate it is desperate by the national economic business enterprise or by the dep. of commerce. Oh, and that they continually harm previous funds (there are government funds creditors that pass to places like fishmongers and commerce new funds for previous funds so as that previous funds gets destroyed and replaced with new funds) there became a action picture approximately that... The forex of one united states is measured by relativity by the forex of yet another united states (huge-unfold common is American funds or Euro) interior the inventory industry

Answer 3

well all be rich,