Expansionary fiscal policy consists of:
a. increasing government spending.
b. increasing payroll taxes to finance health care.
c. decreasing government spending.
d. raising the minimum wage.
Question 2
Using the aggregate supply and demand model, assume the economy is operating along the intermediate portion of the aggregate supply curve. An increase in the money supply will increase the price level and:
a. lower both the interest rate and real GDP.
b. raise both the interest rate and real GDP.
c. lower the interest rate and raise GDP.
d. raise the interest rate and lower real GDP.
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