Only When Budget Deficits Are Financed by Money Creation Does

question 107

Multiple Choice

Only when budget deficits are financed by money creation does the increased government spending lead to ________ in the ________.

• A)a decrease;monetary base
• B)an increase;monetary base
• C)a decrease;money multiplier
• D)an increase;money multiplier

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Definitions:

Par

The face value of a stock or bond, which is the amount stated on the certificate or instrument itself.

Treasury Stock

Securities initially distributed and subsequently bought back by the issuer, which lowers the quantity of shares actively traded on the market.

Common Stock

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a residual claim on corporate earnings in the form of dividends.

Authorized

Pertains to the maximum number of shares a corporation is legally permitted to issue, as specified in its charter.