A large government encounters a production possibilities frontier essentially the same as one faced by a business firm.

By reducing prices, competition encourages ________ transactions, which generates ________ cooperative surplus

A) more; more B) more; less C) less; more D) less; less

Under the Classical assumptions, an increase in government spending causes

A) income to rise. B) income to fall. C) interest rates to rise. D) interest rates to fall.