Exam 22: The Monetary Policy and Aggregate Demand Curves

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.

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.

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 monetary contraction is characterized by ________ output and ________ interest rates.

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

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

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

A decrease in taxes causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

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

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

Higher interest rates lead to reductions in the aggregate output due to ________.

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

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

An increase in financial frictions causes the IS curve to shift ________ and the aggregate demand curve to shift ________.

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

Describe how the Bank of Canada would apply the Taylor principle.

If Canadian college students decide that drinking Mexican-brewed beer helps one get noticed, net exports will tend to fall, causing aggregate demand to ________ and the ________ curve to shift to the left, everything else held constant.

An increase in government spending causes the equilibrium level of aggregate output to ________ at any given interest rate 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 ________.