Congress raises taxes and the Fed reduces money supply, then in the short run, the two policies would lead to: a. lower income but we don’t know if interest rate will rise or not. b. higher income but we don’t know if interest rate will rise or not. c. a lower interest rate but we don’t know if income will rise or not. d. a higher interest rate but we don’t know
Congress raises taxes and the Fed reduces money supply, then in the short run, the two policies would lead to: a. lower income but we don’t know if interest rate will rise or not. b. higher income but we don’t know if interest rate will rise or not. c. a lower interest rate but we don’t know if income will rise or not. d. a higher interest rate but we don’t know
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
If Congress raises taxes and the Fed reduces money supply, then in the short run, the two
policies would lead to:
a. lower income but we don’t know if interest rate will rise or not.
b. higher income but we don’t know if interest rate will rise or not.
c. a lower interest rate but we don’t know if income will rise or not.
d. a higher interest rate but we don’t know if income will rise or not
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