When There Is Keynesian Unemployment in the New Keynesian Model

question 27

Multiple Choice

When there is Keynesian unemployment in the New Keynesian model, a Pareto optimum can be reached by

• A) increasing the money supply or by increasing current government spending.
• B) increasing the money supply or by decreasing current government spending.
• C) decreasing the money supply or by increasing current government spending.
• D) decreasing the money supply or by decreasing current government spending.
• E) increasing nominal wages and increasing the money supply.

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