Which of the Following Is a Problem for Fiscal Policy

question 16

Multiple Choice

Which of the following is a problem for fiscal policy in a currency union?

• A) The central bank controls interest rates on long-term bonds issued by the governments of the member countries of the currency union.
• B) Governments of the member countries of the currency union may run large budget deficits and so crowd out private investment.
• C) Governments of the member countries of the currency union may run large budget deficits and so impose costs on other countries by pushing up interest rates on the bonds these countries' governments issue.
• D) It is difficult to raise enough tax revenue to pay for the operation of the currency union.
• E) Governments of the member countries of the currency union may run large budget deficits and so force taxes to be increased across all countries of the currency union.

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Definitions:

Millon

A psychological assessment tool named after Theodore Millon, used for personality disorders and psychopathology.

Standardized Score

A score that has been transformed to fit a normal distribution, allowing for comparison across different tests or populations.

Myers-Briggs

A personality inventory that categorizes individuals into 16 distinct personality types based on preferences in how they perceive the world and make decisions.

Separate Dichotomies

A concept involving the division of aspects into two completely opposite groups or categories.