Exam 23: The Monetary Policy and Aggregate Demand Curves

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

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

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

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

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

If an economy experiences high interest rates and high unemployment,the ISLM framework predicts that ________ policy has been too ________.

If the monetary policy rule is given by r=1.0 + 0.5p,then 0.5 represents ________.

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

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

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

A decline in taxes ________ consumer expenditure and shifts the ________ curve to the ________,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 ________.

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

An increase 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.

A decline in autonomous planned investment spending causes the equilibrium level of aggregate output to ________ and shifts the ________ 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,________.

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

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