2. Stimulative monetary policy Which of the following are the result of a stimulative monetary policy? Check all that apply. A firm's cost of debt decreases. A firm's cost of equity decreases. A firm's cost of debt increases. Depository institutions experience a decrease in their supply of funds. The following graphs represent (1) The Market for Loanable Funds, (2) The Business Investment Schedule, (3) The Household Consumption Schedule, and (4) The Aggregate Supply and Aggregate Demand Model within the U.S. economy. The aggregate supply and aggregate demand model (4) examines the relationship between changes in national income (real gross domestic product) and changes in the price level (inflation). The aggregate demand curve shows the relationship between the price level and the total amount of money spent on those goods and services. It is downward sloping because people tend to purchase more goods and services as prices decrease, and less goods and services when prices increase. The components that make up the aggregate demand curve are Consumption Spending (C), Investment (I), Government Expenditures (G), and Net Exports (NX). The aggregate supply curve shows the relationship between the price level and the total amount of output firms will produce and sell. It is upward sloping because businesses tend to produce more goods and services when prices increase, and less goods and services when prices decrease. Use the graphs to show what happens in the given scenario and to help answer the questions that follow. (Note: You will not be graded on any changes you make to the graph.)