29. Problem
Recession
Shift AD to Right
In
fl
ation
Shift AD to Left
Tools
Increase
Money Supply
Decrease
Money Supply
Reserve Ratio Lower Raise
Discount Rate Lower Raise
Open Market
Operations
Buy Bonds
from the Banks
Sell Bonds
to the Banks
Excess Reserves
Interest Rate
Lower Raise
38. Quiz
1.What are the four monetary tools?
2. How do you use the tools if the problem is in
fl
ation?
3. How do you use the tools if the problem is
unemployment?
4. How do you use the tools if the problem is stag
fl
ation?
40. π Y
Quiz ADAS Modeling In
fl
ation Output
Curve Direction Level Level
1. Good Weather
2. Slower Money Growth Rate
3. Lower Business Taxes
4. Decrease in Exports
5. New innovation
6. Lower electricity prices
7. Higher Personal Taxes
8. Earthquake
AD
Real GDP Growth Rate
In
fl
ation
Rate
π
LRAS
SRAS
41. π Y
Quiz ADAS Modeling In
fl
ation Output
Curve Direction Level Level
1. Good Weather
2. Slower Money Growth Rate
3. Lower Business Taxes
4. Decrease in Exports
5. New innovation
6. Lower electricity prices
7. Higher Personal Taxes
8. Earthquake