Exam 21: The Influences of Monetary and Fiscal Policy on Aggregate Demand: How Monetary Policy Influences Aggregate Demand

Figure 34-3. -Refer to Figure 34-3.Which of the following sequences (numbered arrows)shows the logic of the interest-rate effect?

In recent years,the Federal Reserve has conducted policy by setting a target for

If the interest rate is above the Fed's target,the Fed should

Figure 34-2.On the left-hand graph,MS represents the supply of money and MD represents the demand for money;on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs. . -Refer to Figure 34-2.If the graphs apply to an economy such as the U.S.economy,then the slope of the AD curve is primarily attributable to the

If there is excess money supply,people will

Which of the following shifts aggregate demand to the right?

Figure 34-1 -Refer to Figure 34-1.If the current interest rate is 2 percent,

The Fed can influence the money supply by

In the short run,a decrease in the money supply causes interest rates to

Consider the following sequence of events: Price level ↑ ⇒ demand for money ↑ ⇒ equilibrium interest rate ↑ ⇒ quantity of goods and services demanded ↓ Τhis sequence explains why the

If the Fed conducts open-market purchases,then which of the following quantities increase(s)?

According to liquidity preference theory,a decrease in the price level causes the interest rate to

If the interest rate is below the Fed's target,the Fed would

Other things the same,which of the following responses would we expect to result from a decrease in U.S.interest rates?

According to liquidity preference theory,an increase in the price level causes the interest rate to

The Fed is concerned about stock market booms because the booms

If the Federal Reserve decreases the money supply,then initially there is a

If the Federal Reserve increases the money supply,then initially people want to

In recent years,the Federal Reserve has conducted policy by setting a target for the

Which of the following actions might we logically expect to result from rising stock prices?