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Sati [7]
3 years ago
14

1.(02.01 LC)

Social Studies
1 answer:
laiz [17]3 years ago
5 0

Answer:

An agreement between citizens and their government

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Answer:

The correct answer is Option "b. The value of the currency would increase"

Explanation:

The government through the central bank can adopt a variety of measures to control the amount of money supply in the economy. The state uses a combination of monetary and fiscal policies to this effect.

In the given example, the federal government would not print more money due to the implications it has not only on the value of the currency but also on other macroeconomic variables such as interest rates and inflation.

By printing money, there would be an excess amount of money supply in the economy. That would make each dollar in the economy worth less than what it was before. This puts downward pressure on interest rates and boosts inflation as well.

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