In the New Keynesian Model,if an Aggregate Demand Increase Is

question 16

Multiple Choice

In the new Keynesian model,if an aggregate demand increase is unanticipated,then ________.

• A)aggregate demand will not change
• B)short-run aggregate supply will shift up immediately
• C)short-run aggregate supply will shift down immediately
• D)there is no immediate effect on the short-run supply curve

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Definitions:

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulating banks, and ensuring the stability of the financial system.

Government Bonds

Debt securities issued by a government to finance its spending, offering a way for investors to lend money to the government in exchange for interest payments.

Price Level

The price level is a measure of the average prices of goods and services in an economy at a given time, often used to evaluate inflation or deflation.

Money Supply Growth

Refers to the rate at which the amount of money in circulation within an economy increases over a specific period of time.