Fiscal Policymakers May Actually Welcome Some Inflation for All of the Following

question 39

Multiple Choice

Fiscal policymakers may actually welcome some inflation for all of the following reasons except:

• A) it potentially raises tax revenues.
• B) it reduces the real value of the national debt allowing governments to "default" on a portion of their debt.
• C) interest payments tend to be fixed so the real interest payments are reduced.
• D) it weakens the independence of the central bank.

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Definitions:

False Alarms

In signal detection theory, instances when a non-present signal is mistakenly detected or reported as present.

Correct Reports

Accurate accounts or narrations of events or data, which have been verified for truthfulness and accuracy.

Fovea

A small depression in the retina of the eye where visual acuity is highest due to the presence of a high concentration of cones.

Cones

Photoreceptor cells in the retina of the eye that are responsible for color vision and function best in relatively bright light.