Question

1. Lower tax rates provide positive work incentives causing the aggregate supply curve to shift right...

1. Lower tax rates provide positive work incentives causing the aggregate supply curve to shift right is a policy supported by
classical economists.
monetarists.
Keynesians.
rational expectationists.
supply side economists.
2. When the Federal Reserve decreases the discount rate, monetarists and Keynesians would agree on which of the following changes to the money supply and interest rates.

Money Supply / Interest Rates
Decrease / Increase
Decrease / No change
Increase / Increase
Increase / Decrease
No change / Increase
3. Assume the U.S. dollar and the Mexican peso are traded in flexible currency markets. Which of the following would cause the U.S. dollar to depreciate relative to the Mexican peso?
Higher price level in Mexico relative to the United States.
Higher interest rates in the United States relative to Mexico.
Higher incomes in Mexico relative to the United States.
Increasing price level in the United States relative to Mexico.
Decreasing price level in the United States relative to Mexico.
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