Governments are also affected by inflation. In which of the following ways is the government affected by inflation?
a. Expected inflation increases the real interest rate paid by the government on its new bond issues (i.e., deficit financing).
b. Inflation increases nominal income tax revenues received by the government.
c. Inflation automatically decreases government spending.
d. All of the above are true. In other words, the government is affected by each one of them.
.B
You might also like to view...
Which of the following is the least likely to be investment?
A. a household buying a new house B. a household saving for retirement C. GM building a new factory D. a car dealer adding to its cars on hand
Which of the following statements about the Supplemental Security Income (SSI) program is FALSE?
A) It is designed to establish nationwide minimum incomes for the aged, the blind, and the disabled B) Benefits are based on need. C) Recipients who receive benefit payments under Social Security are also eligible for SSI. D) It covers children and individuals with mental disabilities, including drug addicts and alcoholics.