In the New Keynesian Approach, an Increase in the Nominal

question 19

Multiple Choice

In the new Keynesian approach, an increase in the nominal money supply affects output by

• A)directly increasing the wealth of consumers and, therefore, their spending.
• B)reducing the real interest rate, thereby stimulating consumption, investment, and net exports.
• C)allowing the government to increase its expenditures.
• D)increasing the funds available for saving, thereby stimulating investment spending.

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