1. If taxes are cut, then consumption

a: falls, aggregate expenditure falls, and output falls.

b: falls, saving increases, investment increases, and output increases.

c: increases, aggregate expenditure increases, and output increases.

d: increases, aggregate expenditure decreases, and output decreases.

e: increases, aggregate expenditure increases, and output decreases.

2. A laissez-faire attitude toward most markets is most closely associated with

a: Keynesians.

b: monetarists.

c: classical economists.

d: supply siders.

e: Reaganomics.

3. In the classical model, the supply of loanable funds is

a: provided through saving by households.

b: positively related to the interest rate.

c: perfectly inelastic.

d: provided through saving by households and positively related to the interest rate.