Exam 22: The Monetary Policy and Aggregate Demand Curves

List the six factors that cause both the IS and the aggregate demand curve to shift.

In the money market, a condition of excess demand for money can be eliminated by a ________ in aggregate output or a ________ in the interest rate, everything else held constant.

An autonomous increase in money demand, other things equal, shifts the ________ curve to the ________.

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

In the IS-MP framework, an expansionary fiscal policy resulting from government purchases, causes aggregate output to ________ and the interest rate to ________, everything else held constant.

An autonomous rise in ________ shifts the MP curve to the ________, everything else held constant.

Higher inflation results from higher interest rates due to ________.

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

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

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

If the central bank did not follow the Taylor principle so that the real interest rate fell when inflation rose, ________.

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

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

The Taylor Principle differs from the Taylor rule because ________.

An increase in autonomous consumer expenditure causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

Everything else held constant, an autonomous easing of monetary policy will cause ________.

An increase in the interest rate due to Taylor principle changes result in ________.

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

The aggregate demand curve is downward sloping because a higher inflation rate leads the central bank to raise ________ interest rates, thereby ________ the level of equilibrium aggregate output., everything else held constant.

The Bank of Canada conducts monetary policy by ________.