Author Question: If the private sector is not willing to purchase government bonds being issued to finance a deficit, ... (Read 57 times)

EY67 · **on:** Jun 30, 2018

If the private sector is not willing to purchase government bonds being issued to finance a deficit, and the government's only option is to print more money, then this will likely cause

A) a lower dollar value. B) inflation.
C) a run on borrowing. D) a weak stock market.

Question 2

According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply will

A) lead to an increase in investment spending and an increase in real GDP which is greater than the increase in investment spending.
B) lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
C) lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending.
D) lead to a decrease in investment spending and an increase in real GDP which is greater than the decrease in investment spending.

brbarasa · **Reply #1 on:** Jun 30, 2018

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