1)If the Central bank pursues T-bills/expansionary monetary policy then interest rates will a) fall and GDP will fall. b) rise and GDP will rise. ) fall and GDP will rise. d) rise and GDP will fall. 2) Which of the following will cause an increase/shift in aggregate supply? a) decreased competition b) an increase in the price level ) an increase in marginal tax rates d) a decrease in input prices 3) According to the theory of liquidity preference/demand for money, an economy's interest rate adjusts a) to balance the supply and demand for loanable funds. b) to balance the supply and demand for money. ) one-for-one to changes in expected inflation. d) to equal the interest rate prevailing in world financial markets. 4) If the Central Bank conducts open-market sales, which of the following three increase: interest rates, prices, investment spending? a) interest rates, prices, investment spending b) interest rates and prices, not investment spending c) interest rates and investment, not prices d) interest rates, not investment or prices