If the Government Finances Its Spending by Issuing Debt to the Public,the

question 8

Multiple Choice

If the government finances its spending by issuing debt to the public,the monetary base will ________ and the money supply will ________.

• A)increase;increase
• B)increase;decrease
• C)decrease;increase
• D)not change;not change

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Definitions:

Preferred Stock

Preferred Stock is a class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash, based on the proportion of shares they already own.

Cash Dividend

A payment made by a company out of its profits to its shareholders, usually in the form of cash.

Treasury Stock-Common

Treasury stock-common refers to shares of a company's own common stock that it has reacquired from shareholders but has not retired.