Which of the Following Pairs of Policies Have Inconsistent Effects

question 42

Multiple Choice

Which of the following pairs of policies have inconsistent effects on aggregate demand?

• A)​A tax increase and an increase in the money supply.
• B)​A transfer payment increase and an increase in the money supply.
• C)​A reduction in government purchases and a reduction of the money supply.
• D)​none of the above

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Definitions:

Debenture

An unsecured loan certificate issued by a company, backed by general credit rather than by specified assets.

Issuing Firm

A company that offers securities to the public or existing shareholders.

Unfunded Bond

A bond issued without a specific reserve fund set aside for its repayment, relying solely on the issuer's general creditworthiness.

Callable Bond

A callable bond is a type of bond that gives the issuer the right to pay off the bond before its scheduled maturity date at a predefined call price.