1) Supply side economic policies seek to
A) raise interest rates through contractionary monetary policy.
B) increase federal government expenditures.
C) increase consumption expenditures by increasing taxes.
D) increase saving and investment using tax incentives.
2) The Federal Reserve System was created to
A) make it easier to finance budget deficits.
B) promote financial market stability.
C) lower the unemployment rate.
D) promote rapid economic growth.
3) Having interest rate stability
A) allows for less uncertainty about future planning.
B) leads to demands to curtail the Fed”s power.
C) guarantees full employment.
D) leads to problems in financial markets.
4) Foreign exchange rate stability is important because a decline in the value of the domestic currency will ________ the inflation rate, and an increase in the value of the domestic currency makes domestic industries ________ competitive with competing foreign industries.
A) increase; more
B) increase; less
C) decrease; more
D) decrease; less