Monetary Policy

If demand is lower than expected, the economy would beexperiencing a(an) 1.___________________ gap.

In order to close the gap using monetary policy, the Fed can(buy/sell) 2._____________ U.S. bonds through a process called3._____________________________.

This would (increase/decrease)4. ______________ the moneysupply.

This change in the money supply will impact which component ofaggregate expenditure? 5.____________________

This will ultimately shift (demand/supply)6.__________________to the (right/left) 7.____________________ toclose the gap.

This will result in (inflation/deflation)8.___________________________.

Employment will (increase/decrease)9.________________________.

If demand is higher than expected, the economy would beexperiencing a(an) 10.____________________gap.

In order to close the gap using monetary policy, the Fed can(buy/sell) 11._____________ U.S. bonds through a process called12._____________________________.

This would (increase/decrease) 13.______________ the moneysupply.

This change in the money supply will impact which component ofaggregate expenditure? 14.____________________

This will ultimately shift (demand/supply)15.__________________to the (right/left) 16.____________________ toclose the gap.

This will result in (inflation/deflation)17.___________________________.

Employment will (increase/decrease)18.____________________________.