An Increase in Federal Budget Deficit

question 141

Multiple Choice

An increase in federal budget deficit

• A)only occurs when there is a surplus in the balance of trade
• B)may create inflation
• C)decreases aggregate supply
• D)decreases aggregate quantity demanded along a stationary curve
• E)may reduce the equilibrium level of output and employment

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Definitions:

Exercise Price

The specified price at which an option contract can be exercised, determining the buy or sell price of the asset under option.

Put Option

A Put Option is a financial contract that gives the holder the right, but not the obligation, to sell a specific quantity of an asset at a set price within a specified time.

Bondholders

Individuals or entities that hold debt securities issued by corporations or governments, entitling them to receive interest payments and the return of principal.

Warrant

A financial security that gives the holder the right to purchase the issuer's stock at a specified price before a specified expiry date.