the economics of money, banking, and financial markets

837 $

© 2014 Pearson Canada Inc.$

10. 
    

    It may be necessary to cut the deficit as part of a credible anti-inflationary policy because the
    public knows that large deficits ____.
    A) are inflationary by themselves in the long run
    B) create inefficiencies
    C) put pressure on the Bank of Canada to expand the money supply to keep interest rates from
    rising
    D) put pressure on the Bank of Canada to contract the money supply to prevent employment
    from rising
    Answer: C
    Diff: 2 Type: MC Page Ref: 632
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


11. 
    

    By ____ its deficit, the government's credibility of anti-inflationary policy ____.
    A) not changing; remains the same
    B) reducing; increases
    C) reducing; decreases
    D) not changing; increases
    Answer: B
    Diff: 2 Type: MC Page Ref: 632
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


12. 
    

    By ____ its deficit, the government makes an anti-inflationary policy ____
    credible.
    A) increasing; more
    B) reducing; more
    C) reducing; less
    D) not changing; more
    Answer: B
    Diff: 2 Type: MC Page Ref: 632
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


13. 
    

    An example of a nominal anchor is ____.
    A) the inflation rate
    B) the real interest rate
    C) government purchases
    D) the tax rate
    Answer: A
    Diff: 2 Type: MC Page Ref: 625
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates