Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 13, Problem 9CQ
To determine
Identify the relevance of the statement.
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What's wrong with this way of thinking? "When the government runs a budget deficit, it simply pays its bills by printing more money. As the newly printed money works its way through the economy, it waters down the value of paper money already in circulation. Thus, it takes more money to buy things. Budget deficits are the major cause of inflation."
Syria’s economic situation is getting worse. Price levels are increasing significantly as the flow of supplies remain low. How can the level of inflation be controlled in a situation like this?
a.
Increase aggregate demand by expansionary fiscal policy
b.
Increase money supply by decreasing bank reserve requirements
c.
Increase tax collections to limit aggregate demand
d.
Increase aggregate supply through importation of necessary goods
One of the fiscal measures of dealing with inflation is:
a.
Implement a budget surplus
b.
Operate a budget deficit
c.
Increase the rate of interest
d.
Operate a balance budget
Chapter 13 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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Similar questions
- a) Why do some economists claim that we should not worry too much about inflation?arrow_forwardWhat are the costs of inflation? How high inflation affects the income distribution in the economy? Explain with details.arrow_forwardWhat can be a reason why inflation is not occuring when government spending increases in an economy?arrow_forward
- how the government somewhat address the issue of inflation? explain.arrow_forwardCountry Y is experiencing severe and unanticipated inflation. Identify one fiscal policy action that could be implemented to reduce inflation. Identify an open-market operation that could be implemented to reduce inflation.arrow_forwardWhat is happening to inflation in the US economy?arrow_forward
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