11. If the Fed reduces the money supply by 5 percent, then the real interest rate will: A) rise in both the short run and the long run. B) rise in the short run but return to its original equilibrium level in the long run. C) rise in the short run but will fall below its original equilibrium level in the long run. D) be unaffected in both the Short run and the long run. 12. According to classical theory, national income depends on while Keynes proposed that determined the level of national income. A) aggregate demand; aggregate supply aggregate supply; aggregate demand C) monetary policy; fiscal policy fiscal policy; monetary policy 13. The equilibrium condition in the Keynesian-cross analysis in a closed economy is: A) income equals consumption plus investment plus government spending. B) planned expenditure equals consumption plus planned investment plus government spending. C) actual expenditure equals planned expenditure. D) actual saving equals actual investment. 14. When firms experience unplanned inventory accumulation, they typically: A) build new plants. B) lay off workers and reduce production. C) hire more workers and increase production. D) call for more government spending