An increase in interest rates
A. increases the cost of holding money and increases the quantity demanded.
B. increases the cost of holding money and decreases the quantity demanded.
C. decreases the cost of holding money and increases the quantity demanded.
D. decreases the cost of holding money and decreases the quantity demanded.
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A policy to reduce inflation is likely to increase unemployment in
A. the short run and the long run
B. the short run but not the long run
C. the long run but not the short run
D. neither the short nort long run
Budget deficits reduce national saving causing real interest rates
A. and investment to fall
B. and investrment to rise
C. to rise and investment to fall
D. None of the above
Tax changes that reduce taxes on interest and capital income may lower tax revenues which
A. increases public saving and so increases national saving
B. increases public saving and so decreases national saving
C. decreases public saving and so increases national saving
D. decreases public saving and so decreases national saving
Facing an adverse supply shock, policymakers can increase aggregate
A. supply, which increase prices and output
B. supply, which decrease prices and increase output
C. demand, which increases prices and output
D. demand, which decreases prices and increase output
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