Only When Budget Deficits Are Financed by Money Creation Does

question 107

Multiple Choice

Only when budget deficits are financed by money creation does the increased government spending lead to ________ in the ________.

• A)a decrease;monetary base
• B)an increase;monetary base
• C)a decrease;money multiplier
• D)an increase;money multiplier

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Definitions:

Reporting Cash Activities

A process that involves documenting all cash transactions of a company over a specific period.

Statement of Cash Flows

A financial report that describes the sources of a company's cash and how it was spent over a specific time period.

Financing Activities

Transactions and events where cash is raised from or repaid to investors, such as issuing equity or debt.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with predetermined dividend payments.