Assume that the government tries to reduce unemployment by increasing government spending. Which of the following unwelcome effects is not a side effect of this measure?
a. Lower overall (private plus government) borrowing in the real credit market
b. Rising budget deficits.
c. Increased real risk-free interest rate
d. Higher inflation rates.
e. Crowding out.
Question 2
M2 includes:
a. Any financial assets that can be spent on real goods and services.
b. Checking accounts plus Deposits at the central bank.
c. Currency in circulation + Reserves of financial intermediaries (e.g., banks) + Checking Accounts + Near Money.
d. Currency in circulation + Checking Accounts
e. Currency in circulation + Checking Accounts + Near Money.
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