Exam 16: Monetary Theory and Policy

The steeper the short-run aggregate supply curve,the __________ the change in price level and the __________ the change in real Gross Domestic Product for a given shift in the aggregate demand curve.

Exhibit 15-7 -Referring to Exhibit 15-7,a decrease in the interest rate will cause a move from

In the aggregate demand-aggregate supply model,an increase in the money supply will cause in the short run a(n)

For interest rates to remain stable during economic expansions,the growth rate of the money supply should

If interest rates are __________ to changes in the money supply and planned investment expenditures are __________ to interest rates,then monetary policy will be __________ in changing Gross Domestic Product.

Exhibit 15-6 -If the Fed is targeting the money supply and the money demand shifts from D_m to D_m' in Exhibit 15-6,the Fed will

An increase in the interest rate will

When people exchange money for financial assets,the interest rate rises.

What is the effect of an expansionary monetary policy on the demand for investment curve?

According to the equation of exchange,if the amount of money in the economy of Monetania times the velocity of money equals 800 million Monetanian dollars ($),then Monetania's

In an economy in which real output grows at an average rate of 3 percent per year,a 7 percent average rate of growth in the money supply would result in a(n)

If the Fed buys bonds,then the money supply

If the price level rises,then the

In an economy in which velocity is constant and the same level of real output is produced year after year,a slow increase in the money supply would result in a

Which of the following is an example of an expansionary monetary policy?

One of the reasons that the FOMC lowered its target for the federal funds rate in September 2007 was

When the money supply increases,people get rid of their excess money by buying real assets,such as durable goods.

Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must

To eliminate a contractionary gap,the Fed can __________ the money supply,which would __________.

The demand for money varies