Exam 23: The Monetary Policy and Aggregate Demand Curves

In deriving the aggregate demand curve a ________ inflation rate leads the central bank to ________ real interest rates,thereby ________ the level of equilibrium aggregate output.

A rise in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ curve to the ________,everything else held constant.

An increase in financial frictions causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

A decline in autonomous consumer expenditure causes the aggregate demand function to shift ________,the equilibrium level of aggregate output to fall,and the IS curve to shift to the ________,everything else held constant.

Everything else held constant,an expansionary ________ policy will cause the interest rate to rise,while an expansionary ________ policy will cause the interest rate to fall.

If the Bank of Canada conducts open market purchases,the money supply ________,shifting the MP curve to the ________,everything else held constant.

Everything else held constant,a decrease in net taxes will cause the IS curve to shift to the ________ and aggregate demand will ________.

In the IS-MP framework a contractionary fiscal policy causes aggregate output to ________ and the interest rate to ________,everything else held constant.

Other things equal,a decrease in autonomous consumption shifts the ________ curve to the ________.

Explain the relationship between real and nominal interest rates when inflation is expected to remain unchanged in the short run.

A decline in autonomous consumer expenditure causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________,everything else held constant.

A decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift down,the equilibrium level of aggregate output to ________,and the IS curve to shift to the ________,everything else held constant.

An autonomous easing of monetary policy ________.

Because prices are sticky in the short-run,when the Bank of Canada raises the overnight rate,________.

An increase in investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift up,the equilibrium level of aggregate output to ________,and the IS curve to shift to the ________,everything else held constant.

In the IS and MP framework,an expansionary monetary policy causes aggregate output to ________ and the interest rate to ________,everything else held constant.

If Canadian college students decide that drinking Mexican-brewed beer helps one get noticed,net exports will tend to fall,causing aggregate demand to ________ and the ________ curve to shift to the left,everything else held constant.

Everything else held constant,a monetary expansion is characterized by ________ output and ________ interest rates.

Describe the relationship between the IS and MP curves and the aggregate demand curve.

The monetary policy (MP)curve indicates the relationship between ________.