If the government of a developing country reduces its budget deficit, then the inflation tax:
A. should decrease.
B. should not change.
C. may increase, decrease, or not change depending on whether the government cuts taxes or raises government expenditures.
D. should increase.
Answer: A
You might also like to view...
List five ways that the creators of the U.S. Federal Reserve System set up the system to be independent from the federal government
What will be an ideal response?
When the Soviet Union began breaking up in the late 1980s, cigarettes began replacing the ruble as the medium of exchange even though the ruble was legal tender. The cigarettes provide an example of commodity money
a. True b. False Indicate whether the statement is true or false
The utility-maximization condition for two goods is achieved by equating the:
a. prices of both goods b. marginal utilities of both goods c. ratios of total utility to price of both goods d. ratios of marginal utility to price of both goods
Event risk is the possibility that
A. the overall price level will rise faster than expected, so that the lender is repaid in dollars that are worth less than the lender expected. B. a borrower will face some circumstance that will prevent the borrower from paying the loan back. C. a major catastrophic occurrence, such as a hurricane, flood, or terrorist attack, will lower the return on the investment. D. the lender will go bankrupt before the loan is fully repaid.