Holding the Nominal Deficit, Nominal Interest Rate, and Total Debt

question 90

Multiple Choice

Holding the nominal deficit, nominal interest rate, and total debt constant, an increase in the inflation rate will:

• A)not affect the real deficit.
• B)raise the real deficit.
• C)lower the real deficit.
• D)either raise or lower the real deficit depending on the real interest rate.

---

Definitions:

Poison Pills

Strategies employed by companies to deter hostile takeovers, making the company less attractive to potential acquirers.

Takeover Attempt

An effort by one company to acquire control over another company, often by purchasing a significant portion of its stock.

Golden Parachutes

Contractual agreements that provide senior executives with significant benefits in the event that they are terminated as a result of a merger or takeover.

Discount Rate

The interest rate used to discount future cash flows to their present values, reflecting the time value of money and risk.