The Government Is Justified in Running a Deficit and Financing

question 19

Multiple Choice

The government is justified in running a deficit and financing it by issuing U.S. Treasury bonds to the private sector when:

• A) the economy is in the contractionary phase of the business cycle.
• B) the economy is in the expansionary phase of the business cycle.
• C) the economy is at the peak of the business cycle.
• D) The government should never run a deficit as this will force up interest rates.

---

Definitions:

Somnambulism

Also known as sleepwalking, a disorder that involves walking or performing other complex behaviors while asleep.

Hypnosis

A trance-like state in which a person has heightened focus and concentration, often used for therapeutic purposes.

Craniotomy

A surgical operation where a bone flap is temporarily removed from the skull to access the brain.

Encephalotomy

A surgical procedure involving an incision into the brain.