Which of the following lists two things that both increase the money supply?
a. raise the discount rate and make open market purchases
b. raise the discount rate and make open market sales
c. lower the discount rate and make open market purchases
d. lower the discount rate and make open market sales
C
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If the government uses fiscal policy to close a recessionary gap,
A) taxes must be cut by more than the gap because of the tax multiplier. B) government expenditure must be increased by more than the gap because of the government expenditure multiplier. C) taxes must be raised by more than the gap because of the tax multiplier. D) government expenditure can be increased by less than the gap because of the government expenditure multiplier. E) taxes can be raised by less than the gap because of the tax multiplier.
The interest-rate effect is the impact on real GDP caused by the ____ relationship between the price level and the interest rate
a. direct b. independent c. linear d. inverse