In the IS-LM model, an increase in government spending in the goods market has an impact on the money market because
a. it increases the money supply.
b. it increases income, which increases money demand.
c. it decreases income, which decreases money demand.
d. it increases interest rates, which decreases money demand.
e. none of the above.
B
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Which of the following is NOT an element of inflation targeting?
A) a public announcement of medium-term numerical targets for inflation B) an institutional commitment to price stability as the primary long-run goal C) an information-inclusive approach in which only monetary aggregates are used in making decisions about monetary policy D) increased accountability of the central bank for attaining its inflation objectives
If a person predicts that a cut in income tax rates will decrease income tax revenues, he or she implicitly assumes that the percentage __________ in the tax base will be __________ the percentage cut in the tax rate
A) rise; less than B) rise; greater than C) rise; equal to D) fall; equal to E) none of the above