Exam 21: The Monetary Policy and Aggregate Demand Curves

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 ________.

The upward slope of the MP curve indicates that

Because prices are slow to move in the short-run,when the Federal Reserve lowers the federal funds rate

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

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

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

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.

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

Inflationary pressures caused the FOMC to increase the federal funds rate by ¼ of a percentage point in June 2004,and by exactly the same amount at every subsequent FOMC meeting through June of 2006.Theses actions

An autonomous tightening of monetary policy

Everything else held constant,an autonomous tightening of monetary policy will cause

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

The Fed's policy actions of reacting to higher inflation by raising the real interest rate during 2004-2006 were

Because prices are sticky in the short-run,when the Federal Reserve raises the federal funds rate

When the financial crisis started in August 2007,inflation was rising and the Fed began an aggressive easing lowering of the federal funds rate,which indicated that

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

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

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

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