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:

Double Feature

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Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between different choices in the allocation of resources.

Recession

A significant decline in economic activity across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Depression

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