The actions of buyers and sellers naturally move markets toward equilibrium

If the government sought to end a recession, which of the following would be an appropriate policy?

a. Increase taxes b. Decrease government purchases. c. Decrease taxes and increase government purchases. d. None of the above

Interest payments on home mortgages and home equity loans are tax deductible. This tax deductibility encourages households to

a. shift other forms of debt to their home mortgage. b. increase the equity in their house. c. make larger payments and pay down their mortgage loan more rapidly. d. decrease the overall amount of household debt in relation to household income.