According to New Keynesians, Why Does an Expected Change in the Money

question 22

Multiple Choice

According to New Keynesians, why does an expected change in the money supply affect output in the short run?

• A)Firms have imperfect information.
• B)People expect central banks to increase the money supply in response to increases in output.
• C)Many prices are set by long-term contracts and thus cannot respond quickly to increases in the money supply.
• D)Prices are flexible in the short run.

---

Definitions:

Union Representation

The act of a labor union negotiating and advocating on behalf of its members with their employers regarding workplace issues.

Job Security

The likelihood of an individual to retain their employment position without the risk of becoming unemployed.

Labor Unions

Organizations representing workers' interests, focusing on negotiating with employers over wages, working conditions, and benefits.

Wages and Benefits

Compensation received by employees for their services including hourly pay or salary, along with additional perks such as health insurance, retirement plans, and bonuses.