A society's production possibility frontier is bowed out from the origin because some resources are better suited for producing one good as opposed to the other.

Which of the following pairs of policies have inconsistent effects on aggregate demand? a. A tax increase and an increase in the money supply

b. A transfer payment increase and an increase in the money supply. c. A reduction in government purchases and a reduction of the money supply. d. none of the above

Potential output is the level of aggregate output that can be sustained in the long run without

A. unemployment. B. inflation. C. government regulation. D. taxes.