Monetization of the Deficit (Or Debt) Means That

question 113

Multiple Choice

Monetization of the deficit (or debt) means that

• A)the government uses monetary policy to control the economy rather than fiscal policy.
• B)inflation accounting corrects for price increases.
• C)the Fed buys newly issued debt and increases the money supply.
• D)the amount of money in circulation is equal to the size of the debt.

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Definitions:

Productive Economy

Refers to an economy that efficiently utilizes its resources to produce goods and services that meet the needs and wants of its population.

Commodity

Commodity denotes basic goods used in commerce that are interchangeable with other goods of the same type.

Allocation

The process of distributing resources, goods, or services in a particular way or to particular recipients.

Scarce Resources

Resources that are limited in supply and cannot fulfill all the uses and demands placed on them.