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Sergeu [11.5K]
2 years ago
12

President Biden wants to spend $3 Trillion on Infrastructure improvement. Republicans claim this will be inflationary. Why

History
1 answer:
Naddik [55]2 years ago
3 0

Answer:

Republicans will claim that such a large spending in infrastructure could be inflationary mainly because of two reasons:

1. If most of the infrastructure bill is financed by money creation from the Federal Reserve, it could always exist the risk of higher inflation due to the growth of the money supply in the economy.

2. If the economic recovery goes faster and better than expected, then, such a large spending bill could theoretically overheat the economy, and cause inflation.

Both of these reasons are highly debatable, and are contentious not only among politicians, but also among economists.

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PLEASE HELP ME OUT ASAP!!!!!
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One thing you have to be clear about is which war. I'm taking it to be WWI.

There was a cash crunch after WWI. France was not any kind of a problem with the United States. It's not B.

I better get to the point. It has to do with the fact that the United States couldn't sell an abundance of manufactured goods. A has to do with that, but it wasn't exactly a decline in the manufacturing industry. It was that she couldn't sell what she had in inventory.

Inflation didn't become a problem in a post WWI environment. In fact, the problem was deflation and unemployment in the 30s, but that is a decade away from this question.

This is one of those questions that a guess is as good as an answer. Britain didn't import which is the same thing as a trade imbalance. I would pick E but I think that D is very possible. They are both worded the wrong way.There was a drop off in American Exports. And Farm prices cratered. Does that mean that Americans were buying more British goods. It is not D if America couldn't sell anything to Britain.

That makes E true. I'd pick E, but there's lots of reasons to pick almost anything else except B.

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