Proper inflation accounting is necessary to measure the size of the real deficit because
A. as a lender, the government gains from inflation.
B. otherwise, the deficit is understated in inflationary times.
C. the government is a borrower that pays back dollars of less real value in inflationary times.
D. interest payments tend to fall in inflationary times.
Answer: C
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Use the sticky-wage theory of aggregate demand to explain the short-run Phillips curve
Refer to the accompanying graph. If this firm is a price taker, then when the price of each unit of output is $30, this firm's profit-maximizing level of output is ________.
A. 60 B. 30 C. 80 D. 100
If total spending is greater than the value of output, firms will
A. cut prices. B. decrease production levels. C. tend to raise prices. D. see inventories rise.
If a program requires people to pay a price that reflects the cost of an externality associated with their actions that they previously did not pay, it will be in their best interest to change their behavior.
Answer the following statement true (T) or false (F)