Irresponsible Fiscal Policy Creates a Problem for the Central Bank

question 21

Multiple Choice

Irresponsible fiscal policy creates a problem for the central bank, since it may be

• A)blamed for slowing economic growth if it refuses to money-finance increased government spending
• B)blamed for higher inflation if it money-finances increased government spending
• C)forced to sell too many government securities
• D)forced to lower interest rates by open market sales
• E)both A)and B)

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Definitions:

Divergent Thinking

A thought process that allows us to expand our view of the world to generate as many ideas as possible without being trapped by traditional problem-solving methods or predetermined constraints.

Practical Ideas

Concepts or solutions that can be implemented effectively and have potential for real-world application.

Human-Centered Design

A design approach that prioritizes the needs, wants, and limitations of the end-user at every stage of the design process.

Human Needs

Fundamental requirements that people need to survive and thrive, including physiological needs, safety, love, and esteem.