If Policy Makers Believe That an Inflationary Boom Is About

question 18

Multiple Choice

If policy makers believe that an inflationary boom is about to begin, the Keynesian view indicates that they should

• A) increase the budget deficit.
• B) increase government spending and hold taxes constant.
• C) decrease government spending and/or raise taxes.
• D) hold government spending constant and decrease taxes.

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Definitions:

Annelids

A phylum of invertebrate worms characterized by segmented bodies and often found in wet environments.

Hemoglobin

A protein found in red blood cells that carries oxygen from the lungs to the body's tissues and returns carbon dioxide from the tissues back to the lungs.

Oxygen-Transporting Pigment

Molecules, such as hemoglobin in vertebrates, responsible for carrying oxygen from the respiratory organs to the rest of the body.

Hemocyanin

A copper-containing oxygen-transport protein found in the blood of some invertebrates, similar in function to hemoglobin in vertebrates.