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Passive monetary policy
is the strategic use of monetary policy to counteract macroeconomic expansions and contractions.
is when central banks only use fiscal policy to try to influence the economy.
has a real effect on the economy in the long run.
is when central banks take orders from the ruling party on how to conduct monetary policy.
is when central banks purposefully choose to only stabilize money and price levels through
Expansionary monetary policy
raises interest rates, causing aggregate demand to shift to the left.
lowers interest rates, causing aggregate demand to shift to the left.
raises interest rates, causing aggregate demand to shift to the right.
lowers interest rates, causing aggregate demand to shift to the right.
lowers interest rates, causing short-run aggregate supply to shift to the right.
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