An inflationary gap may be eliminated using contractionary fiscal policy.

In the above figure, a movement from point B to point C represents

A) an increase in the quantity of money demanded. B) a decrease in the quantity of money demanded. C) a decrease in the demand for money that might be the result of an increase in real GDP. D) an increase in the demand for money that might be the result of a fall in the price level. E) an increase in the demand for money that might be the result of an increase in real GDP.

The revenue that the federal government collects from payroll taxes is earmarked to pay for

a. national defense and income security (welfare) programs b. national defense and Medicare c. Social Security and public schools d. Social Security and Medicare