Under the Assumptions of the New Keynesian Model,an Increase in Aggregate

question 140

Multiple Choice

Under the assumptions of the new Keynesian model,an increase in aggregate demand will

• A)increase prices and output in the short-run.
• B)lead to a decrease in unemployment and an increase in prices in the short run.
• C)lead to an increase in the nominal wage rate in the long run and a decrease in unemployment in the short run.
• D)All of the above are correct.

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Definitions:

Common Law

Law that is derived from custom and judicial precedent rather than statutes, often contrasted with statutory law.

F.O.B.

F.O.B. (Free On Board) is a shipping term used in international trade to indicate that the seller is responsible for the goods until they are loaded on a vessel at the specified location, after which the buyer assumes risk.

Market Price

The current price at which an asset or service can be bought or sold in a given market.

Contract Cancellation

The legal termination of a contract's obligations by one or more of its parties.