Question Details

U.S. Federal Reserve Board chairman Paul Volcker told senators Thursday the huge federal budget 



1. "Another criticism of deficit budgets is that they hamper the private sector's ability to raise capital." This hampering is caused by 
a) high taxes b) high bond prices c) high interest rates d) central bank bond purchases 
2. "Ordinarily, an increase in the budget deficit raises interest rates, but this does not always happen." This may not happen because 
a) the deficit may have been caused by a recession 41 
b) the deficit may have been caused by a tax rate decrease 
c) the deficit may have been caused by a government spending increase 
d) the deficit may have been financed by buying rather than selling bonds 
3. "U.S. Federal Reserve Board chairman Paul Volcker told senators Thursday the huge federal budget deficit is causing disturbing pressures on interest rates." This is disturbing because 
a) interest rates are being pushed too low, creating inflation 
b) interest rates are being pushed too low, lowering saving 
c) interest rates are being pushed too high, creating inflation 
d) interest rates are being pushed too high, crowding out private investment 
4. "The debt buildup is worrisome because it is not financing ......." Complete this sentence. 
a) budget deficits b) bond purchases c) capital investment d) consumption spending 
5. "For future generations, much more important than the size of the deficit is whether government resources are being used to ........" Complete this clipping. 
a) battle inflation b) build infrastructure c) reduce interest rates d) battle unemployment




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