Assignment task: Your firm is trying to decide whether to spend $500 million to build a factory in Country X, a country in Eastern Europe that has recently embraced democratic capitalism. While there are many good reasons to move there, you are worried that the economy is still unstable and that you risk losing much of your money. Because of this, you hired an expensive consulting firm to assess the country. In their report they stated the following: "While Country X appears to be a stable economy, in fact they have been running a budget deficit for the past 8 years and their debt to GDP ratio is now over 100%. It is also true that the Central Bank of Country X is not really independent from the government. This creates a real threat of inflation. Be careful."
Why would a country like Country X with a high level of debt be prone to inflation?