If the economy is experiencing demand-pull inflation, then the appropriate government policy would be to shift the:
a. aggregate demand curve by using a tax increase coupled with spending cuts.
b. aggregate demand curve by using a tax increase coupled with more spending.
c. aggregate demand curve by using a tax cut coupled with spending cuts.
d. aggregate demand curve by using a tax cut coupled with more spending.
e. aggregate supply curve by using a tax cut coupled with spending cuts.
Question 2
The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.
a. True
b. False
Indicate whether the statement is true or false
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