Which of the Following Statements Correctly Describes the New Keynesian

question 7

Multiple Choice

Which of the following statements correctly describes the New Keynesian view of the response of the price level to changes in the money supply?

• A)The price level is unrelated to the money supply.
• B)The price level increases in proportion to increases in the money supply in the short run.
• C)The price level adjusts slowly to changes in the money supply.
• D)The price level is sticky in the long run, and thus doesn't fully respond to changes in the money supply.

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