Economics multiple choice question?

Question

A high public sector net cash requirement is associated theoretically with -----------

1) balanced money supply

2) stable real interest rate

3) rapidly rising inflation

4) volatile exchange rate

Thanks Detailed would be appreciated

Answer 1

From wikipedia:

Public Sector Net Cash Requirement (PSNCR) is the budget deficit in the UK. It is the difference between Government expenditure and Government income.

High PSNCR leads to inflation (as a result of excessive government spending).

Therefore, the answer would be 3, rapidly rising inflation