Changes in the Money Supply in the New Keynesian Model

question 52

Multiple Choice

Changes in the money supply in the New Keynesian model is NOT a likely explanation of the typical business cycle, because the model counterfactually predicts that

• A)consumption is procyclical and the price level is procyclical.
• B)the real money supply is procyclical and consumption is procyclical.
• C)the real wage is countercyclical and the real money supply is procyclical.
• D)consumption is procyclical and the real wage is countercyclical.
• E)the price level is procyclical and the real wage is countercyclical.

---

Definitions:

Income Before Taxes and Interest

Net earnings of a company before accounting for interest and tax expenses, used to analyze operating performance without financing or tax influences.

Accounts Receivable Turnover

A financial ratio that measures how many times a company can turn its accounts receivable into cash within a specific period.

Account Receivables Balance

The total amount of money owed to a company by its customers for goods or services delivered on credit.

Net Credit Sales

The total revenue from sales made on credit, minus returns and allowances, during a specific period.