This Method of Financing Government Spending Is Frequently Called Printing

question 51

Multiple Choice

This method of financing government spending is frequently called printing money because high-powered money (the monetary base) is created in the process.

• A) Financing government spending with taxes.
• B) Financing government spending through a Treasury sale of bonds that are then purchased by the Fed.
• C) Financing government spending by selling bonds to the public, which pays for the bonds with currency.
• D) Financing government spending by selling bonds to the public, which pays for the bonds with checks.

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Definitions:

Relevant Instances

Specific examples or cases that are directly connected to the subject matter being discussed or analyzed.

Probability

The likelihood or chance of an event occurring.

Representativeness Heuristic

A cognitive shortcut that involves making judgments about the probability of an event under uncertainty, based on how much it resembles the typical case.

Prototype

A prototype is an original or first model of something from which other forms are copied or developed, often used in the context of designs, inventions, or the formation of categories in cognition.