Suppose households attempt to decrease their money holdings. To counter this decrease in money demand and stabilize output, the Federal Reserve will

If workers and firms raise their inflation expectations

A) unemployment will fall. B) the short-run Phillips curve will be vertical. C) actual inflation will fall to match expected inflation. D) the short-run Phillips curve will shift upward.

The relation S + (T - G) = I + NX describing the equilibrium of an economy explicitly demonstrates

A) deficit spending by the government reduces either investment and/or net foreign investment. B) deficit spending reduces private saving (assuming net foreign investment remains unchanged). C) as private saving increases net foreign investment must decrease, exports decline. D) as private saving increases the deficit must decline if investment decreases.