When a government has a budget deficit, it must issue (sell) government bonds to finance the deficit
Does it matter for the rate of inflation if the government sells the government bonds to the public or sells the government bonds to the central bank? Explain why it does or does not matter.
It matters greatly. When the government sells the bonds to the public the money supply does not change, but when they sell the bonds to the central bank the money supply increases. If there are large budget deficits, the money supply will increase substantially when the central bank buys government bonds. Using the quantity theory of money, the increase in money supply from the purchase of the bonds by the central bank will increase the inflation rate.
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The difference in economic growth in North Korea and South Korea can be primarily attributed to differences in ________
A) the proximate causes of prosperity B) geography C) culture D) institutions
In March a factory used new technology to produce its output. Then in August a fire destroys half the factory. The new technology shifted the factory's PPF ________ and the fire shifted it ________
A) inward; outward B) outward; inward C) outward; outward D) inward; inward
A change in the price of a good causes
A) an increase in supply. B) a decrease in supply. C) an increase in demand and a decrease in supply. D) a change in quantity supplied.
Jenny Magalnick is a medical researcher at the National Institutes of Health. She produces a(n)
a. transfer b. entitlement c. public good d. merit good e. government good