If the Fed sells government securities on the open market, this will cause _____ in the quantity of money available and _____ in the interest rate.

A hypothesis that assumes that people combine the effects of past policy changes on economic events and their own judgment about future effects of current and future policy changes is known as

A) active expectations. B) modern expectations. C) rational expectations. D) adaptive expectations.

The inefficiency created by income taxation occurs due to

A) the cost of collecting taxes and making welfare payments. B) motivating welfare recipients to work less. C) motivating income earners to work less. D) All of the above answers are correct.