An autonomous monetary policy easing temporarily ________ real interest rates and ________ aggregate output in the short run,but in the long run real interest rates and aggregate output return to the equilibrium levels.
A)reduces;raises
B)reduces;lowers
C)increases;lowers
D)increases;raises

Question

Quizplus · Accepted Answer

An autonomous monetary policy easing typically involves actions like lowering interest rates or increasing the money supply, which in the short run reduces real interest rates and raises aggregate output as borrowing becomes cheaper and economic activity is stimulated. However, in the long run, the economy adjusts and returns to its natural levels of output and interest rates.

An Autonomous Monetary Policy Easing Temporarily ________ Real Interest Rates