Irresponsible Fiscal Policy Creates a Problem for the Central Bank

Multiple Choice

Irresponsible fiscal policy creates a problem for the central bank, since it may be

A) blamed for slowing economic growth if it refuses to money-finance increased government spending
B) blamed for higher inflation if it money-finances increased government spending
C) forced to sell too many government securities
D) forced to lower interest rates by open market sales
E) both A) and B)