In periods of high inflation,
a. people want to hold on to as much money as possible.
b. the purchasing power of money is decreasing.
c. nobody wants to work and earn income.
d. low nominal interest rates are likely to result.
e. nobody wants to buy goods and services.
b
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An example of a deficit item on the U.S. balance of payments is
A) the sale of a carburetor made in Michigan to a Honda plant in Ohio. B) a deposit in a bank in New York by a British firm. C) a U.S. resident flies from New York to Rome on British Airways. D) the payment of a dividend from a Canadian firm to an American living in Maine.
Higher interest rates and, therefore, a decrease in investment spending are most likely to be caused by which policy mix?
A. Deficit reduction and expansionary monetary policy B. Larger deficits and contractionary monetary policy C. Larger deficits and expansionary monetary policy D. Deficit reduction and contractionary monetary policy