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Inflation in the developing country of Terbia has been rising over the last few years and is
currently at a very high level. Two stock market analysts, Stanley Durro and Michelle
Thompson, are discussing the possible causes of inflation. Michelle thinks that the real reason
why prices are rising is because Terbia's economy is expanding. Stanley disagrees. He argues
that the inflation is not demand driven; on the contrary, too much money in the economy is
increasing the price level. s cuff Which of the following, if true, would strengthen Michelle's
argument? OA The growth rate of per capita income in Terbia has been higher than the
population growth rate for the last five OB. In order to reduce its budget deficit, the Terbian
government increased the marginal tax rates last year. Oc. The central bank is planning to
deregulate interest rates on savings deposits. OD. The central bank of Terbia has conducted open
market sales of bonds twice in the last one year. OE. Terbia has a significant presence in global
trade and its currency is used as the world's reserve currency The growth rate of per capita
income in Terbia has been higher than the population growth rate for the last five years OA- OE.
Terbia has a significant presence in global trade and its currency is used as the world's reserve
currency
Solution
The correct answer is:
D. The central bank of Terbia has conducted open market sales of bonds twice in the last one
year.
--------------------------------------------------------------------------------------------
The correct answer is:
B. The government of Dorada scaled up its defense expenditure by more than 50 percent in the
last two years.

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Inflation in the developing country of Terbia has been rising over th.pdf

  • 1. Inflation in the developing country of Terbia has been rising over the last few years and is currently at a very high level. Two stock market analysts, Stanley Durro and Michelle Thompson, are discussing the possible causes of inflation. Michelle thinks that the real reason why prices are rising is because Terbia's economy is expanding. Stanley disagrees. He argues that the inflation is not demand driven; on the contrary, too much money in the economy is increasing the price level. s cuff Which of the following, if true, would strengthen Michelle's argument? OA The growth rate of per capita income in Terbia has been higher than the population growth rate for the last five OB. In order to reduce its budget deficit, the Terbian government increased the marginal tax rates last year. Oc. The central bank is planning to deregulate interest rates on savings deposits. OD. The central bank of Terbia has conducted open market sales of bonds twice in the last one year. OE. Terbia has a significant presence in global trade and its currency is used as the world's reserve currency The growth rate of per capita income in Terbia has been higher than the population growth rate for the last five years OA- OE. Terbia has a significant presence in global trade and its currency is used as the world's reserve currency Solution The correct answer is: D. The central bank of Terbia has conducted open market sales of bonds twice in the last one year. -------------------------------------------------------------------------------------------- The correct answer is: B. The government of Dorada scaled up its defense expenditure by more than 50 percent in the last two years.