C) decrease income tax rates. D) increase income tax rates. Question 23 (1 point

Question

C) decrease income tax rates. D) increase income tax rates. Question 23 (1 point) When the Federal Reserve decreases the money supply and increases interest rates, t his is referred to as: O B) Contractionary monetary policy fiscal policy Question 24 (1 point) Monetary policy adviser Smith wants to decrease aggregate demand Caggregate expenditure) and fiscal policy adviser Jones also wants to decrease aggregate demand (aggregate expenditure), which of the following policies would result to achieve this A) open market purchases of bonds ds by the Federal Reserve; increase in government spending Federal Reserve O B) open market sales of bonds by the Federal Reserve; decrease in government spending. O c) an increase in the Fed Funds rate; decrease,in taxes D) All of the above are correct. Save Question 25 (1 point)

Explanation / Answer

1. (B) Contractionary monetary policy

Reason: Under contractionary monetary policy, money supply is reduced, which in turn reduces AD and increases interest rates

2. (B) Open market sale, decrease in government spending

Reason: These are contractionary monetary and fiscal policies respectively

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