As long as the debt is internally held, there are no problems associated with the government going into debt
Indicate whether the statement is true or false
F
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The quantity theory of money implies that over the long run, the inflation rate will ________
A) equal the nominal interest rate B) equal the growth rate of M2 minus the growth rate of real output C) equal the growth rate of M2 plus the growth rate of real output D) equal the velocity of money
Which of the following statements is incorrect?
A. A country cannot be open to international capital flows, control its domestic interest rate and fix its exchange rate. B. A country can be open to international capital flows and fix its exchange rate but could not also control its own domestic interest rate. C. A country can be open to international capital flows, control its domestic interest rate, and fix its exchange rate. D. A country can be open to international capital flows and control its own domestic interest rate but it can't fix its exchange rate.
To close an inflationary gap through fiscal policy, the government should
A. reduce taxes in order to stimulate investment, and thus increase aggregate supply. B. increase government spending and taxes in order to both increase aggregate demand and aggregate supply. C. decrease government spending in order to increase aggregate supply. D. decrease government spending in order to reduce aggregate demand.
Refer to the information provided in Figure 27.1 below to answer the question(s) that follow.
Figure 27.1Refer to Figure 27.1. Suppose the economy is at Point A a(n) ________ can cause a movement to Point C.
A. decrease in government purchases B. increase in aggregate demand C. decrease in aggregate demand D. increase in government purchases