The Official Measure of the Deficit

question 12

Multiple Choice

The official measure of the deficit:

• A) depends on the nominal interest rate.
• B) depends on the real interest rate.
• C) always underestimates the correct measure of the deficit when inflation is positive.
• D) differs from the correct measure by the inflation rate times taxes.
• E) differs from the correct measure by the inflation rate times government spending.

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Definitions:

Breach

A violation or infringement of a legal obligation, contract, or duty.

Transfer

The process of transferring something from one individual, location, or scenario to another.

Indorsement

An endorsement, especially regarding financial documents, illustrating the process of signing the back of a negotiable instrument to transfer its ownership.

Special

Pertaining to or designating a unique or distinct category, often used to denote something that is exceptional or beyond the ordinary.