If the Government Deficit Is Financed by an Increase in Bond

question 104

Multiple Choice

If the government deficit is financed by an increase in bond holdings by the public ________.

• A) there is no effect of the monetary base
• B) there is no effect on the money supply
• C) the money supply increases
• D) both A and B

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Definitions:

Sales

The total revenue earned from the sale of goods or services related to a company's primary operations.

Common Stock

Common stock is a type of security that represents ownership in a corporation, granting holders voting rights and a share in the company's profits through dividends.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using a company’s assets to create profits.

Net Income

The final income of a business once expenses and taxes are removed from the total revenue.