If a Deficit Is Financed by Issuing New Money, The

question 175

Multiple Choice

If a deficit is financed by issuing new money, the:

• A)government is using its accumulated surplus to issue the new money.
• B)government will be competing with private borrowers for funds.
• C)increased demand for funds will drive up the interest rate.
• D)crowding-out of investment can probably be avoided.

---

Definitions:

Minimum Wages

The minimum wage allowed by law for workers.

Unskilled Labor

Workforce with no specific skills or qualifications, typically performing simple tasks that require minimal training.

Negative Income Tax

A system of social welfare provision that makes direct payments to individuals whose income falls below a certain level, effectively subsidizing their income.

Taxes Owed

The amount of tax liability a taxpayer is responsible for paying to the tax authorities.