How can government budget deficits impact inflation in an economy?

When a government spends more money than it collects in taxes, it creates a budget deficit. To cover this gap, the government may borrow money or print more currency. If the government prints more money, it increases the total amount of money in circulation, which can lead to inflation. Inflation happens when too much money chases too few goods, causing prices to rise. For example, if the government spends a lot on building roads and pays workers with newly printed money, those workers might spend their earnings quickly, pushing prices up for everyday items like groceries and gas.