Assume that taxes are constant.If the government borrows $17 billion in new funds and has a budget deficit of $35 billion, then the central bank has to:
A) reduce the money supply by $52 billion.
B) reduce the money supply by $35 billion.
C) increase the money supply by $17 billion.
D) increase the money supply by $35 billion.
E) increase the money supply by $18 billion.
Correct Answer:
Verified
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