In the New Keynesian Model, If There Are Shocks to Government

question 39

Multiple Choice

In the New Keynesian model, if there are shocks to government spending, and the central bank always reduces the output gap to zero

• A)the model replicates the key business cycle facts.
• B)investment is procyclical.
• C)employment is countercyclical.
• D)consumption is countercyclical.
• E)the money supply is constant.

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