The most likely explanation for the high inflation rates that countries like Russia and the Ukraine have suffered is that
A. large inflows of foreign funds increase the money supply, causing inflation.
B. borrowing from the central bank is the most expedient method of funding the government's expenditures.
C. the flood of financial innovations has increased liquidity in these nations' economies.
D. without inflation, these countries would be unable to achieve high rates of growth.
Answer: B
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When economists and policymakers refer to the Fed's dual mandate, they are referring to:
A) price and exchange rate stability. B) price stability and maximum employment. C) moderate long-term interest rates and maximum employment. D) price stability and moderate long-term interest rates.
Assume that the fixed exchange rate system of 1.1 euros = 1 dollar is below the equilibrium exchange rate of 1.3 euros = 1 dollar in a flexible exchange rate system. Then, at the fixed exchange rate, the dollar would be
a. undervalued and the euro would be overvalued. b. overvalued and the euro would be undervalued. c. revalued and the euro would be devalued. d. depreciated and the euro would be appreciated.
A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately
a. Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality. b. Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency. c. Both representatives' arguments are based primarily on efficiency. d. Both representatives' arguments are based primarily on equality.
Any item that people can use to transfer purchasing power from the present to the future is called
a. a medium of exchange. b. a unit of account. c. a store of value. d. None of the above is correct.