7.

Identify whether the following is an element of Monetary Policy, Fiscal Policy, both, or neither.

a. A tax increase of 2% for all tax brackets b. An increase in government spending on national security c. A decrease in the federal funds rate d. Selling U.S. bonds in open market operations

e. Tightening up the money supply due to high inflation f. Quantitative Easing g. Crowding out h. A recession

8. Identify which curve shifts (AD or AS) and in which direction, in the following examples:

a. Congress passes a law to decrease the income tax rate by 5%. b. The Fed raises the federal funds rate from 2.75% to 2.95%. c. Congress cuts government spending for public schools by 15%. d. The Fed buys bonds from the public.

9. Some countries have had relatively high inflation and relatively high unemployment for long periods of time. Is this consistent with the Phillips curve? Defend your answer.