When a Cascading Series of Defaults Arises, There Is Not

question 56

Multiple Choice

When a cascading series of defaults arises, there is not enough money to pay off outstanding debt, resulting in

• A)inflation.
• B)unemployment.
• C)deflation.
• D)surplus spending.

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Definitions:

Rational Expectationists

A group of economists who believe that individuals make predictions about future economic activities based on available information and in a rational manner.

Laffer Curve

A theoretical representation of the relationship between government revenue raised by taxation and all possible rates of taxation, suggesting an optimal tax rate to maximize revenue.

Inflation

The pace at which prices for products and services generally ascend, reducing monetary value.

Money Supply

The aggregate value of financial assets existing in an economy at a certain time.