Assignment 10 - Monetary Policy

Expansionary monetary policy causes borrowing and spending by consumers and businesses to __________

• increase

• decrease

Expansionary monetary policy causes _________

• AD to shift to the left

• AD to shift to the right

• SRAS to shift to the left

• SRAS to shift to the right

Expansionary monetary policy causes interest rates to _________

• rise

• fall

Assuming SRAS is upward sloping, expansionary monetary policy causes the price level to __________

• increase

• decrease

Contractionary monetary policy causes interest rates to _________

• rise

• fall

Assuming SRAS is upward sloping, expansionary monetary causes real GDP to __________ in the short run

• increase

• decrease

Contractionary monetary policy (i.e. "tight" or "restrictive" monetary policy) involves ________ the money supply

• increasing

• decreasing

Contractionary monetary policy causes borrowing and spending by consumers and businesses to __________

• increase

• decrease

Contractionary monetary policy causes _________

• AD to shift to the left

• AD to shift to the right

• SRAS to shift to the left

• SRAS to shift to the right

Increasing the money supply causes interest rates to _________

• rise

• fall