When governments in developing countries run budget deficits, central banks in these countries typically:
A. sell the bonds issued by the government and increase the money supply in the process.
B. buy the bonds issued by the government and increase the money supply in the process.
C. sell the bonds issued by the government and decrease the money supply in the process.
D. buy the bonds issued by the government and decrease the money supply in the process.
Answer: B
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natural rate level. A) exceeds; rise; right B) exceeds; rise; left C) remains below; fall; left D) remains below; rise; right
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a. Charge a low price b. Charge a high price c. Charge zero, give the good away d. All of the above
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