One of the objectives of supply-side policies is to a. focus attention on the tr

Question

One of the objectives of supply-side policies is to
a. focus attention on the trade-off between inflation and unemployment.
b. sharpen the trade-off between inflation and unemployment.
c. eliminate the trade-off between inflation and unemployment.
d. convince the public of the trade-off between inflation and unemployment.
2.Which of the following will lower interest rates in the short run?
a. an increase in reserve requirements
b. open market sales by the Fed
c. a decrease in real GDP
d. an increase in the price level


3. An open market purchase of T-bonds by the Fed causes the Fed causes the money supply to
a. Fall and bond prices to fall
b. Rise and bond prices to rise
c. Rise and bond prices to fall
d. fall and bond prices to rise

If the fed were to increase the money supply at the same time the goverment was increasing taxes, we could expect
a. An increase in interest rates and real GDP.
b. A decrease in interest rates and real GDP.
c. An increase in interest rates but the effect on real GDP is indeterminant
d. An decrease in interest rates but the effect on real GDP is indeterminant

Explanation / Answer

c, eliminate the trade-off between inflation and unemployment d, an increase in the price level because less money will be demanded b, Rise and bond prices to rise d, An decrease in interest rates but the effect on real GDP is indeterminant Hope this helps

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