It May Be Necessary to Cut the Deficit as Part

question 51

Multiple Choice

It may be necessary to cut the deficit as part of a credible anti-inflationary policy because the public knows that large deficits ________.

• A) are inflationary by themselves in the long run
• B) create inefficiencies
• C) put pressure on the Bank of Canada to expand the money supply to keep interest rates from rising
• D) put pressure on the Bank of Canada to contract the money supply to prevent employment from rising

Understand the importance of market values in maintaining or achieving a firm's capital structure.

Calculate specific costs of capital components using given financial information.

Understand the process of calculating the cost of debt for bonds with various conditions.

Calculate the cost of equity using different models such as the dividend growth model and the Capital Asset Pricing Model (CAPM).

---

Definitions:

Transformational Leadership

Approach to leadership that focuses on the way that leaders transform group goals and actions – mainly through the exercise of charisma. Also a style of leadership based on charisma.

Aspirations

Long-term hopes or ambitions of achieving something.

Socio-economic Demographic

A segment of the population defined by socio-economic factors such as income, education, and occupation.