honeycfa

If the federal government wanted to expand economic growth, it would promote policies that:

A) reduce federal subsidies.

B) reduce taxes.

C) raise taxes.

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In theory, tax cuts lead to more spending which leads to economic growth.

honeycfa

When the Federal Reserve raises the bank lending rate, which of the following occur in the short run?

A) The availability of funds declines and costs decline.

B) The availability of funds declines and costs increase.

C) Costs decline and interest rates rise.

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Increases in interest rates by the Fed is considered a restrictive economy policy. It is attempting to limit the availability of funds, causing interest rates and costs to rise.