Exam 22: The Monetary Policy and Aggregate Demand Curves

The Taylor Principle states that central banks raise nominal rates by ________ than any rise in expected inflation so that real interest rates ________ when there is a rise in inflation.

A decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________, 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 ________.

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

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

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.

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

The Bank of Canada controls the overnight rate by ________.

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

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

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

An increase in the money supply shifts the MP curve to the right, causing the interest rate to ________ and output to ________, everything else held constant.

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

A decline in taxes ________ consumer expenditure and shifts the ________ curve to the ________, everything else held constant.

In the 1970s , the inflation rate in Canada reach levels over ________ percent.

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

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.

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

An increase in autonomous investment spending causes the IS curve to shift ________ and the aggregate demand curve to shift ________.