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21.2 Budget Deficits and Inflation
Budget deficits can be an important source of ____ monetary policy.
A) inflationary
B) recessionary
C) federal
D) fiscal
Answer: A
Diff: 1 Type: MC Page Ref: 531
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined
The government can ____ by ____.
A) raise revenue; levying taxes
B) go into debt; issuing government bonds.
C) create money; levying taxes.
D) both A and B.
Answer: D
Diff: 1 Type: MC Page Ref: 531
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined
If the government deficit is financed by an increase in bond holdings by the public ____.
A) there is no effect of the monetary base
B) there is no effect on the money supply
C) the money supply increases
D) both A and B
Answer: D
Diff: 1 Type: MC Page Ref: 531
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined
One part of monetizing the debt is for the central bank to ____.
A) conduct an open market purchase
B) conduct an open market sale
C) increasing the overnight rate
D) decreasing the overnight rate
Answer: A
Diff: 1 Type: MC Page Ref: 531 - 532
Skill: Recall
Objective List: 21.1 Describe how the demand for money is determined