Which of the following represents debt monetization?

A) an increase in the budget deficit that is financed by money creation
B) an increase in the budget deficit that is financed by foreigner investors’ purchases of domestic bonds
C) an increase in the budget deficit that coincides with a central bank sale of bonds
D) an open market purchase of bonds that results in inflation
E) none of the above

ANSWER:

A) an increase in the budget deficit that is financed by money creation