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QUESTION 1 A. To close a contractionary gap, the RBA must real interest rates by the money supply. O a decrease; increasing O b increase; increasing O C. decrease; not changing O d increase; decreasingQUESTION 2 A. Choose the wrong statement. Holding everything else equal: O a. the IS curve is flatter in the open economy than in the closed economy. O b. the increase in government expenditure (G+) will shift the IS curve out to the right. C. the horizontal shift of the IS curve does not depend on whether the economy is open or closed. O da decrease in foreign real interest rate (, ) will shift the IS curve out to the right. QUESTION 3 A. According to the quantity on money equation, if velocity and output are constant, then an increase in the money supply leads to in inflation. O a. a less than proportional increase O b. a less than proportional decrease O C. the same percentage increase O d. a greater than proportional increase