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Homework answers / question archive / The Central Bank of the Delta economy has decided to make a purchase of bonds in the market open
The Central Bank of the Delta economy has decided to make a purchase of bonds in the market open. The economy has a tax system that is made up of autonomous taxes and taxes proportional to income. Select the INCORRECT answer (s): The price of the bonds decreases. O Equilibrium consumption increases as GDP expands. The government deficit remains constant. OR The equilibrium GDP of this economy increases due to the expansion of investment.
Incorrect answer is option 3- The government deficit remains constant.
Because when the Central bank will purchase the bonds , the debt of the government will change and the deficit will not remain constant.
