According to New Keynesians, an Increase in Which of the Following

question 319

Multiple Choice

According to New Keynesians, an increase in which of the following will tend to cause the inflation rate to increase?

• A) anticipated future inflation
• B) firms' average inflation adjusted per-unit costs of production
• C) an unexpected increase in aggregate demand
• D) all of the above

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Definitions:

After-Tax Cost

The net cost of a transaction or investment after the effects of taxes are considered, often used in analyzing the cost of financing options.

Specific Capital

This refers to the various types of capital (debt, equity, etc.) a company uses for financing its operations and investments, with each type having its own cost and characteristics.

Component Costs

The individual costs associated with the different sources of capital a firm utilizes in its capital structure.

Embedded Costs

Embedded costs refer to the expenses that a company has already incurred and cannot be recovered.