Typical consumption taxes create an incentive to save

If net external wealth increases for firms, it could ____ their ability to borrow and expand.

A) cut off completely B) increase C) decrease D) have no effect

When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline