According to economists who believe in Ricardian Equivalence, when the government runs a deficit and issues bonds,
A) the public recognizes that it will be subject to higher taxes in the future in order to pay off these bonds.
B) the public works less to avoid these future taxes, causing the demand for bonds to decrease.
C) the Fed must purchase bonds to keep the interest rate from rising.
D) the Fed must sell bonds to keep the interest rate from rising.
37) Evidence from the time period 1960-1980 indicates that inflation in the United States resulted from
A) an employment target that was set too high.
B) the government's inability to sell bonds to the Fed.
C) an expansion in the money supply to finance federal government expenditures.
D) the excessive sale of government bonds to the public.
38) Because policies in the United States were too expansionary from 1965 through 1973, the U.S. suffered
A) demand-pull inflation.
B) cost-push inflation, as workers sought higher wages in order to keep up with inflation.
C) both demand-pull and cost-push inflation.
D) neither demand-pull nor cost-push inflation.
39) In the period 1965 through the 1970s, policymakers pursued ________ policies in order to achieve ________.
A) expansionary; high employment
B) expansionary; low inflation
C) contractionary; high employment
D) contractionary; low inflation
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