Monetizing the debt has what effect on the economy?

a.Rapid increase in AS with a drop in inflation

b.Rapid increase in AD with an increase in inflation

c.Slow increase in AS with steady inflation

d.Decrease in AD with an increase in inflation

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In actual practice, does the Fed monetize the debt?

a.No longer, although it monetized much of the deficit in the 1980s.

b.Yes, although it monetizes less now than in the 1980s.

c.No, it did not do so even with large deficits in the 1980s and early 2000s.

d.Yes, it has monetized the deficit steadily since the early 1970s.

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Monetizing deficits has led to serious inflation in

a.the United Kingdom

.b.Canada

.c.Russia, Latin America, and Israel

.d.All of the above are correct.

e.the United States.

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If a budget deficit increases interest rates, it is possible that investment will

a.rise, because investment is more attractive when interest rates are higher

.b.rise, because investment is directly related to interest rates.

c.fall, leading to a larger capital stock

.d.fall, so that there is a smaller capital stock.

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Very recently, the debt-to-GDP ratio has been:

a.higher than usual.

b.volatile.

c.stabilized.

d.lower than usual.