Expansionary Fiscal Policy Tends To

question 203

Multiple Choice

Expansionary fiscal policy tends to:

• A)reduce both U.S. interest rates and U.S. capital inflows.
• B)reduce U.S. interest rates but increase U.S. capital inflows.
• C)increase U.S. interest rates but reduce U.S. capital inflows.
• D)increase both U.S. interest rates and U.S. capital inflows.

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Definitions:

Semi-Annual Coupon

Describes the interest payment made to bondholders every six months until the bond's maturity date.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date, accounting for interest payments and the repayment of the principal.

Market Price

The current cost for engaging in transactions involving assets or services.

Zero-Coupon Bond

A type of bond that does not pay periodic interest but is issued at a discount to its face value and matures at face value.