If the government wanted to reduce interest rates without changing output, it should
a. increase consumption and reduce the money supply.
b. increase the money supply and raise government spending.
c. increase the money supply and raise taxes.
d. both b and c.
C
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The quantity of U.S. exports is determined by
A) U.S. consumption expenditure. B) political factors. C) aggregate incomes in the rest of the world. D) U.S. aggregate expenditure. E) U.S. GDP.
The King of Rococo hires you as an economic consultant. He is concerned that the output level in Rococo is too high and that this will cause prices to rise. He feels that it is necessary to reduce output by $100 billion. He tells you that the MPC in Rococo is 0.9. Which of the following would be the best advice to give to the King of Rococo?
A. Reduce government spending in Rococo by $10 billion. B. Increase taxes in Rococo by $100 billion. C. Reduce government spending in Rococo by $90 billion. D. Increase government spending in Rococo by $100 billion.