This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What is the relationship between debt intolerance and the inflation tax? What will be an ideal ... (Read 66 times)

fox

  • Hero Member
  • *****
  • Posts: 540
on: Jun 30, 2018
What is the relationship between debt intolerance and the inflation tax?
 
  What will be an ideal response?

Question 2

If the level of government spending rises and simultaneously there is a fall in the money stock, we definitely know that
 
  a. income will rise.
  b. the change in the interest rate will be ambiguous.
  c. income will fall.
  d. the interest rate will fall.
  e. None of the above


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Chou

  • Sr. Member
  • ****
  • Posts: 335
Reply #1 on: Jun 30, 2018
Answer to Question 1

A government that is unable to borrow (at a reasonable cost) is likely to resort to selling its debt to the central bank, raising the money supply and inflation. As the price level rises, the real seignorage falls, so that a constant budget deficit requires an ever larger growth rate of the money supply and acceleration of inflation. This phenomenon helps to explain how creditors become intolerant of the government's debt in the first place.

Answer to Question 2

E


fox

  • Hero Member
  • *****
  • Posts: 540
Reply #2 on: Jun 30, 2018
Thank you


Chou

  • Sr. Member
  • ****
  • Posts: 335
Reply #3 on: Jun 30, 2018
No problemo


« previous next »
 

Did you know?

Historic treatments for rheumatoid arthritis have included gold salts, acupuncture, a diet consisting of apples or rhubarb, nutmeg, nettles, bee venom, bracelets made of copper, prayer, rest, tooth extractions, fasting, honey, vitamins, insulin, snow collected on Christmas, magnets, and electric convulsion therapy.

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

Did you know?

Autoimmune diseases occur when the immune system destroys its own healthy tissues. When this occurs, white blood cells cannot distinguish between pathogens and normal cells.

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Did you know?

A cataract is a clouding of the eyes' natural lens. As we age, some clouding of the lens may occur. The first sign of a cataract is usually blurry vision. Although glasses and other visual aids may at first help a person with cataracts, surgery may become inevitable. Cataract surgery is very successful in restoring vision, and it is the most frequently performed surgery in the United States.

Leaf structure and its relationship to the C4 cycle Leaf structure and its relationship to the C4 cycle
Relationship Between Training Intensity and VO2max Improvement Relationship Between Training Intensity and VO2max Improvement
The relationship between the permissible exposure limit (PEL), the short-term exposure limit (STEL), ... The relationship between the permissible exposure limit (PEL), the short-term exposure limit (STEL), ...
Relationship between Latitude and Income per Capita Relationship between Latitude and Income per Capita
Relationship Between the Atlas and the Axis. The Dens of the Axis Provides a Pivotal Point Around Wh Relationship Between the Atlas and the Axis. The Dens of the Axis Provides a Pivotal Point Around Wh
The relationship between recombination frequency and physical distance between genes The relationship between recombination frequency and physical distance between genes
Video: Osmosis - Isotonic, Hypotonic, and Hypertonic​ Solutions

For a complete list of videos, visit our video library