With Sticky Prices, in the Stylized DSGE Model, a Monetary

question 71

Multiple Choice

With sticky prices, in the stylized DSGE model, a monetary contraction ________, which ________.

• A) raises inflationary expectations; pushes the Phillips curve up
• B) lowers inflationary expectations; expands labor supply
• C) decreases aggregate demand; decreases labor demand
• D) raises taxes; reduces labor demand
• E) represents a fiscal expansion; pushes up labor demamd

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