An increase in the supply of bonds leads to
A) an increase in the price of bonds, a decrease in the interest rate, and an increase in aggregate demand.
B) an increase in the price of bonds, an increase in the interest rate, and an increase in aggregate demand.
C) a decrease in the price of bonds, an increase in the interest rate, and an increase in aggregate demand.
D) a decrease in the price of bonds, an increase in the interest rate, and a decrease in aggregate demand.
Ans: D) a decrease in the price of bonds, an increase in the interest rate, and a decrease in aggregate demand.
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If indicators like weak demand and falling commodity prices caused concern about deflation (falling prices), what could the Fed do to head off the deflationary threat?
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Suppose that nineteenth-century politicians had succeeded in their attempt to impose a “single tax”—a tax on suppliers of land (i.e., landlords). Most of the economic burden of the tax would have been borne by
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The government of Auspicia increases taxes and cuts spending during a recession. Which of the following is likely to happen in in Auspicia, according to the Keynesians?
A. Reduction in unemployment B. Increase in consumption C. Decrease in economic activity D. Increase in investment