1.Monetarists believe that under the Quantity Theory of Money, all else being equal, an increase in the money supply will cause:

		1. consumption expenditures to rise along with prices (inflation).
		2. investment spending to fall.
		3. national income/output to fall.
		4. government expenditures to rise.
		5. all of the above will occur.

2.When Supply-Side/Monetarists are in control of the FED, money supply and interest rates will be characterized by which of the following?

A. Interest rates will be stable ("pegged") while money supply growth will be erratic.

B. Interest rates will be erratic (i.e., determined by market forces of supply and demand) while money supply growth will be stable (i.e., growing at a constant growth rate).

C. Interest rates will be stable ("pegged") and money supply growth will be stable.

D. Interest rates will be erratic (determined by market forces of supply and demand) and money supply growth will be erratic.

E. None of the above will be true as the Supply-Side/Monetarists schools have no set guidelines for monetary activity.