an increase in interest rates affects aggregate demand by

price level and planned aggregate expenditures by households, firms, and the governmentconsumption, investment, government purchases, net exportsif price level changes but all else remains constant, economy willif any other variable but price level changes, aggregate demand willthree things that can cause aggregate demand to shiftchanges in govt policies, chanes in expectations of households and firms, changes in foreign variables`fed managing money supply and interest rates to pursue macro policy objectiveschanges in federal taxes and purchases intended to achieve macro policy objectivesan increase in the price level reduces real money holdingswhen price level falls, real value of household wealth risesif full-employment GDP is equal to $4.2 trillion, what does LRAS look like?decrease in aggregate demand in the economy will have what effect on equil in the long run?price level will fall and level of GDP will be unaffectedtotal spending increases faster than total production and aggregate demand increases by more than long run aggregate demandwhen economy enters a recession, your employer is _______ to reduce your wages because _____unlikely; output and input prices generally fall during recessionif short run aggregate supply increases (shifts to the right) by less than long run aggregate supply, then, at the short run equilibrium,meanings of each of variables in irving fischers quantity equation?M = m1 definition of money supply, V = average number of times a dollar is spent on goods and services, P = GDP deflatorsaying "my iphone is worth $300 represents moneys function asif a person withdraws from their savings and puts it in checking, M1 will _____ and m2 will _____if credit card balances rise in the economy, M1 will _____ and M2 will _____the required reserves of a bank equal its _____ the required reserve ratiomain monetary policy tools used by Fed to manage money supplyopen market operations, discount policy, reserve requirementsprocess of bundling loans together and buying and selling these bundlesmoney supply times the velocity of money equals price level times real outputquantity theory of money predicts that, in the long run, inflation results from themoney supply growing at a faster rate than real GDPthere is a strong link between changes in the money supply and inflation in _____ runmaintaining price stability and high employment; most important goals mentioned explicitly in the Employment Act of 1946amount of money - currency and checking account deposits - that individuals holdwhen Federal Open Market Committee decides to increase money supply, it ____ US securities.when Federal Open Market Committee decides to decrease money supply, it ____ US securities.an increase in interest rates affects aggregate demand byshifting curve to the left, reducing real GDP and lowering price levelconsumption, investment, and next exports decrease, aggregate demand decreasesif Fed believes economy is about to fall into recession, it shoulduse an expansionary monetary policy to lower interest rate and shift AD to the rightif Fed believes inflation rate is about to increase, it shoulduse a contractionary monetary policy to increase the interest rate and shift AD to the leftFed's program to purchase $400 billion in long term treasury securities while selling an equal amount of shorter term treasury securitiescause value of investing in US financial assets to become more desirable to foreign investorsspending and taxes increasing/decreasing with business cycleincludes increasing govt spending and decreasing taxes to increase ADincludes decreasing govt spending and increasing taxes to increase ADE/C Fed lowers the target for the federal funds rateE/C families are allowed to deduct all their expenses for daycare form their federal income taxesif govt increases expenditure without raising taxes, this will...increase budget deficit and require govt to borrow more and cause interest rates to increase, reducing private investment and crowding out private sectordeficit/ surplus in federal govt's budget if the economy were at potential GDPyear to year shortfall in tax revenues relative to govt spending (T< G + TR), financed through govt bondshow does budget deficit act as an automatic stabilizer to reduce severity of a recession?transfer payments to households increase, consumers spend more, tax obligations fall due to falling wages and profitsThe advice to "keep searching, there are plenty of jobs around here for which you are qualified", would be most appropriate for which of the following types of unemployment?) Aggregate demand is actually composed of all the components of GDP: you should recall GDP=c+i+gs+nx.

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