Figure 3 17. In Figure 3 above, which of the following sequences shows the logic of the interest rate effect? a. 1,2,3,4 b. 1,4,3,2 c. 3,4,2,1 d. 3,2,1,4 18. Other things the same, which of the following responses would we expect to result from an decrease in U.S. interest rates? a. U.S. citizens decide to hold more foreign bonds. b. people choose to hold more currency. c. You decide to purchase a new oven for your cookie factory. d. All of the above are correct. 19. What is the difference between monetary policy and fiscal policy? 20. Suppose that there are no crowding-out effects and the MPC is .9. By how much must the government increase expenditures to shift the aggregate demand curve to the right by $10 billion? 21. When the Fed increases the money supply, the interest rate decreases. This decrease in the interest rate increases consumption and investment demand so the aggregate demand curve shifts to the right. (True or False) Chapter 17 22. The misery index is calculated as the a. inflation rate plus the unemployment rate. b. unemployment rate minus the inflation rate. c. actual inflation rate minus the expected inflation rate. d. natural unemployment rate plus the long-run inflation rate