Policies to promote growth by increasing saving and investment work through
A) increasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital.
B) increasing the supply of loanable funds, lowering the interest rate, lowering the level of investment in physical capital.
C) increasing the supply of loanable funds, increasing the interest rate, raising the level of investment in physical capital.
D) decreasing the supply of loanable funds, lowering the interest rate, raising the level of investment in physical capital.
Question 2
Refer to Figure 15-11. In the dynamic model of AD-AS in the figure above, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) unemployment rates higher than what would occur if no policy had been pursued.
B) real GDP lower than what would occur if no policy had been pursued.
C) short-term interest rates higher than what would occur if no policy had been pursued.
D) inflation higher than what would occur if no policy had been pursued.
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