Ignoring any supply-side effects, if government expenditure on goods and services decrease by $10 billion and taxes decrease by $10 billion, then real GDP ________ and the price level ________

An expansionary fiscal policy is likely to result in the Treasury

A) selling more bonds, the prices of bonds falling, and interest rates falling. B) buying more bonds, the prices of bonds rising, and interest rates falling. C) selling more bonds, the prices of bonds rising, and interest rates rising. D) selling more bonds, the prices of bonds falling, and interest rates rising.

The oversimplified formula for the multiplier is misleading because it ignores the effects of

A. price-level changes. B. the foreign sector. C. variable taxes. D. All of the above are correct.