Suppose There Is a Simultaneous RBA Sale of Bonds and Increase

question 57

Multiple Choice

Suppose there is a simultaneous RBA sale of bonds and increase in government spending. We know with certainty that this combination of policies must cause:

• A) a decrease in i.
• B) a decrease in Y.
• C) an increase in Y.
• D) an increase in i.
• E) an increase in M.

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Definitions:

Bankruptcy Code

The Bankruptcy Code is the set of laws that govern bankruptcy in the United States, providing procedures for individuals and businesses to discharge or reorganize their debts.

Liquidation Proceedings

A legal process during which a business closes operations, sells its assets, and pays off creditors, typically in the context of bankruptcy.

Chapter 11 Plan

A reorganization plan under U.S. bankruptcy laws that allows a debtor to keep its business running while paying creditors over time.

Creditors

Individuals, companies, or entities to whom money is owed by debtors.