If the aggregate demand parameter a in the IS curve increases, and the central bank wishes to stabilize output at potential, it should: (a) Raise the nominal interest rate. (b) Lower the nominal interest rate. (c) Buy government bonds. (d) Expand the money supply. (e) None of the above.
If the aggregate demand parameter a in the IS curve increases, and the central bank wishes to stabilize output at potential, it should: (a) Raise the nominal interest rate. (b) Lower the nominal interest rate. (c) Buy government bonds. (d) Expand the money supply. (e) None of the above.
Chapter26: Monetary Policy
Section: Chapter Questions
Problem 3SQ
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If the aggregate
wishes to stabilize output at potential, it should:
(a) Raise the nominal interest rate.
(b) Lower the nominal interest rate.
(c) Buy government bonds.
(d) Expand the money supply.
(e) None of the above.
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