Suppose the economy is operating below its full employment level. The Fed
A) can move the economy toward the full employment level by expanding the money supply to increase aggregate supply.
B) can move the economy toward the full employment level by expanding the money supply to increase aggregate demand through both its direct and its indirect effects.
C) can move the economy toward the full employment level by expanding the money supply to increase aggregate demand and to hold prices constant.
D) is powerless to affect either aggregate demand or aggregate supply. Fiscal policy is needed.
Question 2
Refer to Figure 1A.1. The slope of the line between the points where hours worked per week are 20 and hours worked per week are 30 is
A) 0.2. B) 5. C) 10. D) 50.
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