Exam 23: The Monetary Policy and Aggregate Demand Curves

The reason inflation spiralled in Canada in the 1970s can be attributed to ________.

Suppose the aggregate demand curve is given by Y= 12 - r then,if the nominal interest rate increases by 1 percent ________.

When the central bank ________ the money supply,the MP curve shifts to the right,interest rates ________,and equilibrium aggregate output ________,everything else held constant.

Everything else held constant,a decrease in autonomous planned investment spending will cause the IS curve to shift to the ________ and aggregate demand will ________.

Based on the Taylor Principle,a central bank's endogenous response of raising interest rates when inflation rises ________.

Everything else held constant,a depreciation of the domestic currency will cause the IS curve to shift to the ________ and aggregate demand will ________.

Central banks aim to ________.

How does autonomous tightening of monetary policy impact the aggregate demand curve.

The Bank of Canada controls the overnight rate by ________.

An expansionary monetary policy shifts the MP curve to the ________,reducing ________,everything else held constant.

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

A reduction in government spending causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________,everything else held constant.

As bonds become a riskier asset,the demand for money ________ and,all else constant,the equilibrium interest rate ________.

An autonomous tightening of monetary policy ________.

A contractionary monetary policy shifts the MP curve to the ________,reducing ________,everything else held constant.

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

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________,everything else held constant.

Everything else held constant,changes in the interest rate affect planned investment spending and hence the equilibrium level of output,but this change in investment spending ________.

Everything else held constant,an increase in government spending will cause ________.

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