Which of the following demonstrates that policymakers cannot know the outcome of their decisions without knowing the public's expectations of them?

If the government chooses to finance its debt interest obligations by issuing bonds that are purchased by the Federal Reserve,

a. the money supply will remain the same because the Fed pays for the bonds by creating an equivalent deposit at the Treasury b. external debt will be decreased dramatically c. overconsumption will be halted d. the money supply will decrease, causing deflation e. the money supply will increase, causing inflation

In the basic 45-degree line model, what is the effect of a decrease in the price level?

a. The expenditure line will shift downward. b. The expenditure line will shift upward. c. There will be movement to the left on the expenditure line. d. There will be movement to the right on the expenditure line.