In the New Keynesian Model, an Increase in Current Government

question 49

Multiple Choice

In the New Keynesian model, an increase in current government spending

• A)decreases output and increases the real wage rate.
• B)decreases output and decreases the real interest rate.
• C)decreases output and increases the real interest rate.
• D)increases output and decreases the real interest rate.
• E)increases output and leaves the real interest rate unchanged.