4. Supply-siders support lower tax rates because they believe that

A) tax revenues will rise.

B) incentives to save will increase.

C) more consumers will do research and development.

D) governments will spend more.

E) taxes have positive externalities.

5. Which fiscal policy does not target aggregate supply?

A) tax incentives to stimulate savings

B) shifting taxes from income to consumption

C) increasing transfer payments

D) support for research and development

E) subsidizing education and training

9. When the Bank of Canada raises interest rates, this

A) increases unemployment and decreases inflation.

B) decreases unemployment and decreases inflation.

C) decreases unemployment but creates stagflation.

D) increases unemployment and increases inflation.

E) decreases unemployment and increases inflation.

10. During a period of deflation the Bank of Canada will

A) raise interest rates, causing an exchange rate depreciation.

B) lower interest rates, causing an exchange rate appreciation.

C) do nothing because falling prices are good.

D) lower interest rates, causing an exchange rate depreciation.

E) raise interest rates, causing an exchange rate appreciation.