Refer to Figure 17-1. Suppose that the economy is currently at point A. If the Federal Reserve engaged in contractionary monetary policy, where would the economy end up in the short run?

Which of the following is the most likely cause of most recessions according to the new classical model?

a. a change in the money supply. b. an increase in taxation and government spending. c. a fall in expected profits. d. a rise in the price of oil. e. an unanticipated change in the money supply.

If a tax rate falls as a person's income rises, the tax is a

a. proportional tax b. progressive tax c. regressive tax d. a poll tax e. a head tax