Exam 22: The Monetary Policy and Aggregate Demand Curves

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

An autonomous easing of monetary policy ________.

A decline in autonomous consumer expenditure 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.

A decrease in taxes causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

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

An increase in autonomous consumer expenditure 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.

Explain the relationship between Bank of Canada's overnight rate and the real interest rate.

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 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.

Aggregate output and the interest rate are ________ related to government spending and are ________ related to taxes.

Higher interest rates lead to reductions in the aggregate output due to ________.

Describe monetary easing at the Bank of Canada during the 2007-2009 Financial Crisis.

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

When the financial crisis started in August 2007, inflation was rising and the Bank of Canada began an aggressive easing lowering of the overnight rate, which indicated that ________.

Despite an expansionary monetary policy, an economy experiences a recession. Everything else held constant, the recession could occur in spite of the rightward shift of the MP curve if ________.

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

An increase 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.

A decline in the money supply shifts the MP curve to the left, causing the interest rate to ________ and output to ________, everything else held constant.

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

If the central bank did not follow the Taylor principle ________.