Answer Happy

If the Reserve Bank of New Zealand lowers the official cash
rate, the money supply
, leading to a
in the market interest
rate, ceteris paribus. Thus, households prefer to
consume
and firms prefer to invest
. Suppose that the
short-run aggregate-supply curve remains unchanged. The lower
official cash rate tends to shift the aggregate-demand
curve ,
leading to
output and inflation.
increases; fall; more; more; rightwards; lower
increases; fall; more; more; leftwards; higher
increases; fall; more; more; rightwards; higher
decreases; rise; less; less; leftwards; higher