Exam 22: The Monetary Policy and Aggregate Demand Curves

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

How does autonomous tightening of monetary policy impact the aggregate demand curve.

In the IS-MP framework, an expansionary fiscal policy resulting from government purchases, causes aggregate output to ________ and the interest rate to ________, everything else held constant.

The Bank of Canada controls the overnight rate by ________.

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.

Explain the difference between autonomous changes in monetary policy and the Taylor principle.

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

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