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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