Which of these is(are) true? I. People on fixed incomes will not be hurt if the United States monetizes its debt.
II) If the cost of Medicare changes as health care costs increase, it would enhance the government's ability to keep deficits and the national debt under control over the long term.
III) If the United States monetizes its debt, it will result in a weaker dollar if foreigners hold fewer U.S. dollars.

Question

Quizplus · Accepted Answer

Monetizing debt can lead to inflation, which erodes the purchasing power of fixed incomes, making statement I false. Increasing Medicare costs would likely increase deficits, not control them, making statement II false. Monetizing debt can lead to a weaker dollar if foreigners reduce their holdings of U.S. dollars, making statement III true.

Which of These Is(are) True? I