Which of the following statements is (are) true? I. At full employment, expansionary fiscal policy results in an increase in aggregate demand, increasing output temporarily above full employment.
II) When the government runs a deficit, it must sell bonds.
III) When the federal government spends more than tax revenues permit, it can sell bonds only to foreigners.

Question

Quizplus · Accepted Answer

At full employment, expansionary fiscal policy can temporarily increase output above full employment. When the government runs a deficit, it typically sells bonds to finance the deficit, but it is not limited to selling bonds only to foreigners.

Which of the Following Statements Is (Are) True? I