Exhibit 24-4 -The AD Curve Shifts to the Right as a Result

question 203

Multiple Choice

Exhibit 24-4
-The AD curve shifts to the right as a result of

• A)an increase in government purchases.
• B)an increase in taxes.
• C)a downshift in foreign demand.
• D)a downshift in consumption.
• E)a monetary policy shift to a lower inflation target.

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Definitions:

Open Market Operations

Actions by a central bank to buy or sell government securities in the open market to influence the money supply and interest rates, a key tool of monetary policy.

Government Securities

Financial instruments issued by the government to finance its expenditures, offering a return to investors.

Stock Market

A marketplace where shares of public companies are bought and sold.

Actual Money Multiplier

The real-world effect of a change in the base money supply on the money supply, taking into account changes in reserves and currency holdings.