An overvalued fixed exchange rate can be maintained only as long as:
A) the country's central bank reserves are available to support currency intervention in the foreign exchange market.
B) the country's central bank can increase the domestic money supply.
C) the country's government increases debt financing.
D) none of the above.
A
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Which of the following correctly describes a way in which deficit spending can impose a burden on future generations? I
Failure to allocate deficit spending to uses that boost future real Gross Domestic Product (GDP) will require taxing future generations at a higher rate to repay the resulting higher public debt. II. Government deficits that lead to higher employment and real Gross Domestic Product (GDP) in the future will generate increased income taxes for future governments, which will respond by spending the higher tax revenues, creating higher future government budget deficits. III. Other things being equal, deficit spending fuels increased consumption of goods and services by the current generation that crowds out capital investment, thereby leaving future generations with a smaller stock of capital than otherwise would have existed. A) I only B) II only C) I and III only D) II and III only
Bond A and Bond B are identical except Bond B has a longer term. Therefore, we expect Bond _____ to pay a higher rate of interest
Fill in the blank(s) with correct word