Saving for protection against unexpected setbacks-such as the loss of a job or a medical emergency-is called ________ saving.

Which of the following occurs as the economy moves rightward along a given IS curve?

A) A reduction in the interest rate causes investment spending to decrease. B) A reduction in the interest rate causes money demand to increase. C) A reduction in the interest rate causes a reduction in the money supply. D) An increase in government spending causes a reduction in demand for goods. E) A reduction in taxes causes a reduction in demand for goods.

For this question, assume that the economy is initially operating at the natural level of output. A monetary expansion will cause

A) no change in the real wage in the medium run. B) an increase in investment in the medium run. C) a reduction in the interest rate in the medium run. D) no change in the nominal wage in the medium run.