the economics of money, banking, and financial markets

740 $

© 2014 Pearson Canada Inc.$

7. 
   

   By looking at aggregate demand via its component parts, we can conclude that the aggregate
   demand curve is downward sloping because ____.
   A) a lower inflation rate causes the real interest rate to fall, and stimulates planned investment
   spending
   B) a lower inflation rate causes the real interest rate to rise, and stimulates planned investment
   spending
   C) a higher inflation rate causes the real interest rate to fall, and stimulates planned investment
   spending
   D) a higher inflation rate causes the real interest rate to rise, and stimulates planned investment
   spending
   Answer: A
   Diff: 2 Type: MC Page Ref: 573
   Skill: Recall
   Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
   of aggregate output and the inflation rate

   
   


8. 
   

   Everything else held constant, an autonomous monetary policy easing ____ aggregate
   ____.
   A) increases; demand
   B) decreases; demand
   C) decreases; supply
   D) increases; supply
   Answer: A
   Diff: 2 Type: MC Page Ref: 573
   Skill: Recall
   Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
   of aggregate output and the inflation rate

   
   


9. 
   

   Everything else held constant, an autonomous monetary policy tightening ____ aggregate
   ____.
   A) increases; demand
   B) decreases; demand
   C) decreases; supply
   D) increases; supply
   Answer: B
   Diff: 2 Type: MC Page Ref: 573
   Skill: Recall
   Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
   of aggregate output and the inflation rate