the economics of money, banking, and financial markets

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17. 
    

    An autonomous easing of monetary policy ____.
    A) causes an upward movement along the monetary policy curve
    B) causes a downward movement along the monetary policy curve
    C) shifts the monetary policy curve upward
    D) shifts the monetary policy curve downward
    Answer: D
    Diff: 2 Type: MC Page Ref: 560
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


18. 
    

    Based on the Taylor Principle, a central bank's endogenous response of raising interest rates
    when inflation rises ____.
    A) causes an upward movement along the monetary policy curve
    B) causes a downward movement along the monetary policy curve
    C) shifts the monetary policy curve upward
    D) shifts the monetary policy curve downward
    Answer: A
    Diff: 2 Type: MC Page Ref: 560 - 561
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


19. 
    

    Based on the Taylor Principle, a central bank's endogenous response of decreasing interest
    rates when inflation falls ____.
    A) causes an upward movement along the monetary policy curve
    B) causes a downward movement along the monetary policy curve
    C) shifts the monetary policy curve upward
    D) shifts the monetary policy curve downward
    Answer: B
    Diff: 2 Type: MC Page Ref: 560 - 561
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate

    
    


20. 
    

    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 ____.
    A) the Bank of Canada pursued an autonomous monetary policy tightening
    B) the Bank of Canada pursued an autonomous monetary policy easing
    C) the Bank of Canada had an automatic negative response to inflation based on the Taylor rule
    D) the Bank of Canada had an automatic positive response to inflation based on the Taylor rule
    Answer: B
    Diff: 2 Type: MC Page Ref: 562
    Skill: Recall
    Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
    the interest rate