QUESTION 10 Suppose there is a simultaneous tax increase and open market purchase of bonds. Which of the following must occur as a result of this? 0 Output increases. O Output decreases. O The interest rate increases. 0 The interest rate decreases. O Both output and the interest rate increase. QUESTION 11 A REA sale of securities will most likely have which of the following effects? O A rightward shift in the IS curve. 0 A leftward shift in the IS curve. O Ari upward shift in the LM curve. 0 Adownward shift in the LM curve. 0 Adownward shift in the IS curve and an upward shift in the LM curve. QUESTION 12 Suppose there is a simultaneous tax increase and open market sale of bonds. Which of the following must occur as a result ofthis? O Output increases. 0 Output decreases. O The interest rate increases. 0 The interest rate decreases. 0 Both output and the interest rate increase. QUESTION 13 Exhibit: /S-LM Monetary Policy Interest rate, r LM IS Y2 Y1 Y3 Income, Output, Y Based on the graph, starting from equilibrium at interest rate 1 and income Y1, an increase in the money supply would generate the new equilibrium combination of interest rate and income: O a. 13, Y2. O b. 13, Y3. O c. 12, Y3. O d. 12, Y2