1 During a period of recession /contraction, which of the following would be true?

1. The supply of goods and services would be decreasing.

2. Interest rates would be decreasing.

3. Unemployment would be increasing.

4. Inflation would be decreasing.

a. 1 and 2.

b. 1 and 3.

c. 1, 2 and 3.

d. 1, 2, 3, and 4.

2 If the Federal Reserve wants to increase interest rates, which of the following actions

might it take?

a. Buy government securities.

b. Sell government securities.

c. Decrease the reserve requirement.

d. Decrease federal government spending.