Which one of the following is likely to be the most inflationary in its effects?

Borrowing from the public or banks to finance a budget deficit reduces the money supply available in the market. When the government borrows from the public, it decreases the money available with the public. Similarly, borrowing from banks reduces the banks' capacity to lend.

Creating new money to finance a budget deficit is the most inflationary because it directly increases the total money supply in the market. This increase in money supply without a corresponding increase in goods and services leads to inflationary pressure.

Repaying public debt is less inflationary as it returns money to the public, but the effect is usually less immediate and direct compared to creating new money.

Therefore, the creation of new money to finance a budget deficit is the most likely to be inflationary.