In a Time of Inflation When the Government Budget Is

question 55

Multiple Choice

In a time of inflation when the government budget is balanced in the conventional sense, the real (i.e., deflated) value of the government debt is:

• A) growing at the rate of inflation.
• B) growing, but at a rate less than the rate of inflation.
• C) constant.
• D) decreasing at the rate of inflation.

---

Definitions:

Marginal Product

The additional output that results from using one more unit of a particular input, holding other inputs constant.

Average Product

The average output produced per unit of a factor of production over a specific period, often calculated for labor or capital.

Input

The resources used in the production process, such as labor, materials, and machinery.

Explicit Costs

These are direct payments made to others in the course of running a business, such as wages, rent, and materials.