Exam 22: The Monetary Policy and Aggregate Demand Curves

Higher inflation results from higher interest rates due to ________.

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.

A decrease 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.

The Bank of Canada conducts monetary policy by ________.

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

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

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

Everything else held constant, changes in the interest rate affect planned investment spending and hence the equilibrium level of output, but this change in investment spending ________.

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

Because prices are sticky in the short-run, when the Bank of Canada raises the overnight rate, ________.

Explain the relationship between real and nominal interest rates when inflation is expected to remain unchanged in the short run.

The Taylor Principle differs from the Taylor rule because ________.

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

Which of the following statements concerning IS - MP analysis is true?

A decline in autonomous consumer expenditure causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________, everything else held constant.

The upward slope of the MP curve indicates that ________.

Everything else held constant, an increase in government spending will cause ________.

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.

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