Question : 11) Which of the following least likely to lead to : 1373933

11) Which of the following is least likely to lead to inflationary monetary policy?

A) Rising unemployment

B) Expanding federal budget deficits

C) Declining oil prices

D) Conflict in the Middle East

12) Which of the following is most likely to lead to inflationary monetary policy?

A) Declining oil prices

B) Resolution of conflict in the Middle East

C) The enactment of a free-trade agreement with Mexico

D) Rising unemployment

13) Which of the following is most likely to lead to inflationary monetary policy?

A) Declining oil prices

B) Resolution of conflict in the Middle East

C) The enactment of a free-trade agreement with Mexico

D) Rising government budget deficits

14) Methods of financing government spending are described by an expression called the government budget constraint, which states the following:

A) the government budget deficit must equal the sum of the change in the monetary base and the change in government bonds held by the public.

B) the government budget deficit must equal the difference between the change in the monetary base and the change in government bonds held by the public.

C) the government budget deficit must equal the difference between the change in the monetary base and the change in government bonds held by the Fed.

D) the government budget deficit must equal the difference between the change in the monetary base and the change in government bonds held by the Treasury.

15) Methods of financing government spending are described by an expression called the government budget constraint, which states the following:

A) DEFICIT = (G – T) = ΔMB + ΔBONDS.

B) DEFICIT = (G – T) = ΔMB – ΔBONDS.

C) DEFICIT = (G – T) = ΔBONDS – ΔMB.

D) DEFICIT = (G – T) = ΔMB/ΔBONDS.

16) If the government finances its spending by issuing debt to the public, the monetary base will ________ and the money supply will ________.

A) increase; increase

B) increase; decrease

C) decrease; increase

D) not change; not change

17) If the government finances its spending by selling bonds to the central bank, the monetary base will ________ and the money supply will ________.

A) increase; increase

B) increase; decrease

C) decrease; decrease

D) not change; not change

18) Financing government spending with taxes

A) causes both reserves and the monetary base to rise.

B) causes both reserves and the monetary base to decline.

C) causes reserves to rise, but the monetary base to decline.

D) has no net effect on the monetary base.

19) Financing government spending by selling bonds to the public, which pays for the bonds with currency,

A) leads to a permanent decline in the monetary base.

B) leads to a permanent increase in the monetary base.

C) leads to a temporary increase in the monetary base.

D) has no net effect on the monetary base.

20) The financing of government spending by issuing debt

A) causes both reserves and the monetary base to rise.

B) causes both reserves and the monetary base to decline.

C) causes reserves to rise, but the monetary base to decline.

D) has no net effect on the monetary base.