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Fiscal policy

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Question 4

When a government runs a structural fiscal deficit, which of the following actions can it take to directly finance this shortfall without resorting to direct monetary creation?

Conducting open market sales of foreign exchange reserves to buy back domestic currency

Purchasing outstanding equity shares in private infrastructure and utility corporations

Directing the central bank to lower the reserve requirement for commercial banks to expand credit

Selling newly issued government bonds and treasury bills to domestic and foreign financial markets

Fiscal policy Questions

  1. A Level
  2. /Economics
  3. /Fiscal policy