If a Country with a Large Government Debt Uses Money
If a country with a large government debt uses money creation to service and repay the debt,this will lead to
A)lower interest rates.
B)an appreciation of the nation's currency in the foreign exchange market.
C)inflation,higher interest rates,and a financial crisis.
D)rapid economic growth,as the expansionary monetary policy stimulates the economy and generates the additional tax revenue to service the larger debt.
What will happen if a country uses money creation to finance a large and expanding national debt?
A)Real output and employment will grow rapidly.
B)Nominal interest rates will fall.
C)The foreign exchange value of the currency will increase.
D)The rate of inflation will rise.
Which of the following best explains the political attractiveness of debt financing relative to taxation?
A)Debt financing pushes the visible cost of government into the future.
B)Debt financing exposes the current costs of government programs;taxes do not.
C)Debt financing reduces the attractiveness of special-interest spending.
D)Taxes allow politicians to supply voters with immediate benefits without having to impose a visible cost.
During 2009 and 2010,the federal government financed approximately ______ percent of its spending through borrowing.(Fill in the blank)