According to the article by S. Fischer and W. Easterly, there are four ways of financing a

budget deficit. List them at the provided space:

a) Printing money

b) FX reserves

c) Domestic borrowing

d) Foreign borrowing

e) All of the above are true

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3) Which one of the below is NOT likely to happen when domestic debt is issued to finance

government deficit?

a) teal interest rate increases

b) kowewing by government reduces credit that would otherwise be available to

private, sector

c) the government may run into problem of servicing its debt if excessive

borrowing takes place

d) the government hopes to put off inflationary effects of a deficit

e) the exchange rate appreciates and trade balance deteriorates

4) Which one of the below statements on heterodox programs is correct EXCEPT?

a) countries implementing heterodox programs achieved substantial reductions in inflation

without severe costs in terms of reduced economic activity

b) heterodox stabilization programs have been based on the premise that even if the

"fundamentals" are corrected, inflation would still continue at high rates

c) such programs will require freezing prices and wages for a short period of time

d) no consensus is required by different layers in the society as consensus build-up would

dilute the effects of the stabilization program