If a professional association restricts membership and firms cannot employ nonassociation workers, the equilibrium wage will increase

One reason why the government may not choose to close a recessionary gap by raising both taxes and spending and thereby keeping the budget balanced is because it

a. leaves undone the problem of unemployment b. can create inflation c. may involve raising taxes too high for political comfort d. eventually leads to deficit budgets e. does not impact on aggregate demand which is where the problem lies

If the Federal Reserve lowered the reserve requirements imposed on the banking industry, which of the following will most likely happen in the short run?

a. an increase in the demand for loanable funds, which will exert upward pressure on the interest rate b. an increase in the supply of loanable funds, which will exert downward pressure on the interest rate c. an increase in the unemployment rate d. a decrease in the rate of inflation