What are the coordinates for the new long-run equilibrium?

The supporters of a proposal to increase marginal taxes on those earning over $200,000 a year say this change would generate $100 billion in new tax revenues. A supply-side economist would argue that the actual revenue raised will be

A) exactly $100 billion because there are no offsetting factors to a tax increase. B) more than $100 billion, because lower income people will work harder when they perceive the tax system to be fairer. C) more than $100 billion because interest rates will also be affected. D) less than $100 billion because some people will respond by working less.

A rise in real income will have which of the following effects on money demand?

a. The money demand curve will shift out. b. The money demand curve will not shift at all. c. The money demand curve will shift in. d. Real income has no effect on money demand.