Question

because it Monetary policy that decreases the interest rate is called A. contractionary monetary policy, reduces AD. B. contractionary monetary policy; reduces SRAS. C. expansionary monetary policy; increases AD. D. expansionary monetary policy; increases SRAS. QUESTION 11 Other things the same, a fall in an economy's overall level of prices tends to A. raise both the quantity demanded and supplied of goods and services. B. raise the quantity demanded of goods and services, but lower the quantity supplied. C. lower the quantity demanded of goods and services, but raise the quantity supplied. D. lower both the quantity demanded and the quantity supplied of goods and services. QUESTION 12 Stag-deflation may result from__ A. an increase in the supply of money or an increase in government spending. B. an increase in nominal wages or a decrease in labor productivity. C. a decrease in income taxes or a decrease in oil price. D. a stock market crash held by households or a recession overseas

Answer 1

Answer Option C) expansionary monetary policy, increases aggregate demand .

Monetary policy that decreases the interest rate is called expansionary monetary policy because it increases aggregate demand .The reason is that with fall in interest rate investment will fall and saving in accounts will decrease. People prefer to keep money in hand leads to increase in aggregate demand.

Answer Option B) raise the quantity demanded off goods and services and lowers the quantity supplied.

Other things being equal, a fall in economy overall price level raise the quantity demanded off goods and services and lowers the quantity supplied. The reason is that at less prices aggregate demand increases due to negative relation in price and aggregate demand while, at less prices aggregate supply decreases due to positive  relation in price and aggregate supply.