In dealing with their financing needs, developing countries have found that the inflation tax provides:
A. neither a short-run nor a long-run solution.
B. a short-run solution but not a long-run solution.
C. a long-run solution but not a short-run solution.
D. both a short-run and a long-run solution.
Answer: B
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An expansionary fiscal policy is likely to
A) decrease a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds. B) increase a government budget surplus (or increase a budget deficit) and decrease borrowing by the Treasury which will buy more bonds. C) increase a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds. D) decrease a government budget surplus (or increase a budget deficit) and decrease borrowing by the Treasury which will buy more bonds.
Which is the largest component of aggregate expenditure?
A) consumption expenditures B) government expenditures C) net export expenditures D) planned investment expenditures