To put government debt into perspective, it should be:
a. Compared to a nation's balance on goods and services.
b. Adjusted for inflation to find the real debt.
c. Adjusted by any increase in wage rates caused labor union activity.
d. All the above.
e. None of the above.
.B
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The appropriate monetary policy in the event of a recessionary gap would be to
A) raise the required reserve ratio. B) increase the difference between the federal funds rate and the required reserve ratio. C) engage in an open market purchase of U.S. government securities. D) increase the difference between the discount rate and the federal funds rate.
The marginal propensity to save (MPS) is the
A) fraction of additional income that is saved. B) amount of saving that is later consumed. C) total amount of income that is saved. D) part of consumption spending that does not depend on income.