If high level of income leads to increase in expenditure and aggregate Demand which in turn leads to higher level of output, why can't Government print more currency notes to achieve higher level of Aggregate Demand and gross domestic product????
Dear student,
It must be noted that printing of more currency notes is inflationary in nature. This is because printing of more currency notes increases the circulation of money in the economy, which in turn leads to further increase in aggregate demand and prices.
It must be noted that printing of more currency notes is inflationary in nature. This is because printing of more currency notes increases the circulation of money in the economy, which in turn leads to further increase in aggregate demand and prices.