Keynes hypothesized that the precautionary component of money demand was primarily determined by the level of

A highly profitable cartel arrangement among sellers contains the seeds of its own disintegration because

A) a monopoly arrangement is more unstable than an oligopoly arrangement. B) a price maintained above each cartel member's marginal cost is an incentive to offer secret price reductions to attract additional business. C) monopoly agreements will, in the long run, reduce net revenue to zero. D) net revenue for the cartel as a whole could be increased by producing at the level where marginal revenue equals marginal cost for each cartel member. E) the cartel members will have a strong incentive to reduce quality.

If policy makers wanted to use both monetary and fiscal policy to stimulate demand and reduce a high rate of unemployment, which of the following would be most appropriate?

a. A larger budget deficit and the purchase of securities in the open market by the Fed b. A government surplus and the sale of securities in the open market by the Fed c. A larger government deficit and an increase in the discount rate d. A larger government surplus and a reduction in the discount rate