Which of the following is most influenced by changes in the discount rate?

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.

Figure 36-5 ? Which of the graphs in Figure 36-5 are consistent with a depreciation of the U.S. dollar and an increase in net exports caused by a decrease in U.S. interest rates?

A. 1 B. 2 C. 3 D. 4