Suppose stock prices rise. To offset the resulting change in output the Federal Reserve could
a. increase the money supply. This increase would also move the price level closer to its value before the rise in stock prices.
b. increase the money supply. However, this increase would move the price level farther from its value before the rise in stock prices.
c. decrease the money supply. This decrease would also move the price level closer to its value before the rise in stock prices.
d. decrease the money supply. However, this decrease would move the price level farther from its value before the rise in stock prices.
c
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As the economy expands, tax revenues:
A. rise and transfer payments rise, causing the economy to expand by more than it would in the absence of automatic stabilizers. B. fall and transfer payments rise, causing the economy to expand by less than it would in the absence of automatic stabilizers. C. fall and transfer payments fall, causing the economy to expand by more than it would in the absence of automatic stabilizers. D. rise and transfer payments fall, causing the economy to expand by less than it would in the absence of automatic stabilizers.
Economists who focus on fiscal austerity focus on the short-run.
Answer the following statement true (T) or false (F)