Monetary Policy Response
Recessionary Gap
- In a recession the central bank should use ________ monetary policy which means an ________ in money supply and a ________ in interest rates. This would cause Consumption (C), Investment (I), Net Exports (NX), and Aggregate Demand to ________
Inflationary Gap (Boom)
- In an economic boom there is usually high inflation so the central bank would use ________ monetary policy which means a ________ in money supply and an ________ in interest rates. This would cause Consumption (C), Investment (I), Net Exports (NX), and Aggregate Demand to ________