What Is the Main Difference Between a Demand Shock Stemming

question 50

Multiple Choice

What is the main difference between a demand shock stemming from monetary policy and a demand shock that comes from a change in spending?

• A)In the short-run,an autonomous monetary policy easing lowers real interest rates and raises aggregate output whereas a positive spending shock has the opposite effect on both variables.
• B)An autonomous monetary policy easing raises inflation permanently whereas a positive spending shock only raises inflation temporarily.
• C)An autonomous monetary policy easing has a temporary effect on the real interest rate whereas a positive spending shock has a permanent effect on the real interest rate.
• D)all of the above
• E)none of the above

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