Extremely large budget deficits may lead to
a. low inflation.
b. low employment.
c. high unemployment.
d. high inflation.
d. high inflation.
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Bonds differ from stocks in all of these ways except
A. a purchase of corporate stock becomes a part owner of the corporation, while a bondholder does not. B. bondholders loan money to the corporation, which has priority for repayment, while stockholders may lose their investment. C. stockholders know with a high degree of certainty how much money they will get, while bondholders do not. D. All of these responses are correct.
An improvement in productivity will usually increase profits
a. True b. False Indicate whether the statement is true or false
Assume the government decides to decrease taxes and to finance the expected budget deficit with borrowing in the real credit market. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real credit market with demand for real credit shifting to the right. b. Start the analysis in the real goods market with aggregate demand shifting to the left. c. Start the analysis in the real goods market with aggregate supply shifting to the left. d. Start the analysis in the real goods market with aggregate supply shifting to the right. e. Start the analysis in the real credit market with demand for real credit shifting to the left.
When inflation rises people will
a. demand more money so the price level rises. b. demand more money so the price level falls. c. demand less money so the price level rises. d. demand less money so the price level falls.