Interest rate based monetary policy transmission mechanism

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Reference no: EM131112944

1. According to the Keynesian sticky price theory, a rise in aggregate demand results in ___________ price level in the near term and in __________ price level in the long term.

2. According to Keynes, the impact of a decrease in money suppply is a:

A. lowered interest rate and larger growth in real GDP

B. higher interest rate and smaller growth in real GDP

C. lower interest rate and smaller growth in real GDP

D. higher interest rate and larger growth in real GDP

3. According to the interest rate based monetary policy transmission mechanism:

A. a decrease in required reserve ratio will not affect interest rates

B. an increase in the required reserve ratio will not affect interest rates

C. an increase in the required reserve ratio will lower interest rates

D. a decrease in the required reserve ratio will lower interest rates

Reference no: EM131112944

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