Which of the Following Are Possible Consequences When the Government

question 41

Multiple Choice

Which of the following are possible consequences when the government reduces government
Purchases to address an inflationary gap?
I. increase in the price of bonds
II. increase in net exports
III. decrease in the federal budget deficit (or increase the surplus)
IV. decrease in the exchange rate

• A) I, II, III, and IV
• B) I and III only
• C) I, III, and IV only
• D) II, III, and IV only