In the 1960s, many economists and policymakers believed the trade-off between inflation and unemployment was permanent

If the Fed adopts a policy of pegging the interest rate, a ________ in government spending forces the Fed to increase the money supply to prevent interest rates from ________

A) fall; increasing B) fall; decreasing C) rise; decreasing D) rise; increasing

Which of the following would cause a fall in the market interest rate?

a. an increase in the risk cost of investment b. an increase in the inflation rate c. an increase in the marginal rate of return on investment d. a decrease in the marginal product of capital e. none of the above