Suppose the Private Sector Wishes to Hold a Constant Level

question 95

Multiple Choice

Suppose the private sector wishes to hold a constant level of real high-powered money.This means that with an ongoing inflation of p percent,each year the government treasury can obtain goods from the private sector in exchange for ________ p times the existing high-powered money,a government revenue source called ________.

• A)creating,seignorage
• B)creating,transfer payments
• C)collecting,seignorage
• D)collecting,transfer payments

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Definitions:

Norm Of Reciprocity

A social norm that expects individuals to respond to each other with equivalent actions, such as returning favors or responding to hostility in kind.

Foot-In-The-Door Study

Psychological experiments demonstrating that agreeing to a small request increases the likelihood of agreeing to a larger request later on.

Compliance

The act of conforming to or following the rules, requests, or orders of others, often to gain approval or avoid conflict.

Scarcity

The economic principle that describes the limited availability of resources compared to the theoretically limitless wants and needs of individuals.