Suppose There Is an RBA Purchase of Bonds and Simultaneous

question 33

Multiple Choice

Suppose there is an RBA purchase of bonds and simultaneous tax cut. We know with certainty that this combination of policies must cause:

• A) an increase in Y.
• B) a decrease in M.
• C) a decrease in i.
• D) an increase in i.
• E) a decrease in Y.

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Definitions:

Coal

A combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams, used primarily as a source of energy.

Carbon Monoxide

A colorless, odorless, and poisonous gas produced by incomplete combustion of carbon-containing materials.

Ozone

A molecule made up of three oxygen atoms that occurs naturally in the Earth's stratosphere and protects life by absorbing ultraviolet radiation.

Troposphere

The troposphere is the lowest layer of Earth's atmosphere, extending from the Earth's surface up to about 8 to 15 kilometers, where most weather phenomena occur.