Exam 22: The Monetary Policy and Aggregate Demand Curves

An increase in autonomous consumer expenditure causes the aggregate demand function to shift up, the equilibrium level of aggregate output to ________, and the IS curve to shift to the ________, everything else held constant.

An autonomous easing of monetary policy ________.

An expansionary monetary policy shifts the MP curve to the ________, reducing ________, everything else held constant.

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

When the central bank ________ the money supply, the MP curve shifts to the right, interest rates ________, and equilibrium aggregate output ________, 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.

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

An autonomous rise in ________ shifts 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, ________.

In the IS and MP framework, an expansionary monetary policy causes aggregate output to ________ and the interest rate to ________, everything else held constant.

Describe monetary easing at the Bank of Canada during the 2007-2009 Financial Crisis.

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

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.

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

Tightening monetary policy refers to ________.

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

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

Despite an expansionary monetary policy, an economy experiences a recession. Everything else held constant, the recession could occur in spite of the rightward shift of the MP curve if ________.

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

Using the IS - MP model, explain the effects of a monetary expansion combined with a fiscal contraction. How do the equilibrium level of output and interest rate change?