In the New Keynesian View, the Larger the Proportion of Firms

question 66

Multiple Choice

In the new Keynesian view, the larger the proportion of firms in the economy with sticky prices,

• A)the steeper the SRAS curve will be.
• B)the flatter the SRAS curve will be.
• C)the greater the increase in the price level for a given shift in the AD curve.
• D)the less effective is fiscal policy in increasing output.

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Definitions:

Coordinated Actions

Organized and synchronized activities that are directed towards achieving a specific goal.

Hindbrain

The posterior part of the brain, including the cerebellum, pons, and medulla, involved in regulating basic life functions like heartbeat and breathing.

Reflexes

Involuntary and nearly instantaneous movements in response to stimuli, which are mediated through the nervous system without conscious thought.

Coordination

The ability to use different parts of the body together smoothly and efficiently.