New Keynesian Inflation Dynamics Predicts That an Increase in Aggregate

question 124

Multiple Choice

New Keynesian inflation dynamics predicts that an increase in aggregate demand will generate, in chronological order

• A) a leftward movement along a horizontal short-run aggregate supply curve, a short-run decline in real GDP, a downward shift in the short-run aggregate supply curve, and a decrease in the price level.
• B) a rightward movement along a horizontal short-run aggregate supply curve, a short-run increase in real GDP, an upward shift in the short-run aggregate supply curve, and an increase in the price level.
• C) an leftward shift in a vertical short-run aggregate supply curve, a short-run decline in real GDP, an upward movement along the short-run aggregate supply curve, and an increase in the price level.
• D) a rightward shift in a vertical short-run aggregate supply curve, a short-run increase in real GDP, an upward movement along the short-run aggregate supply curve, and an increase in the price level.

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Definitions:

Coordination Loss

The inefficiency in group performance compared to individual performance, due to the difficulty of aligning the efforts and actions of all members.

Task Taxonomy

Group tasks can be classified according to whether a division of labour is possible; whether there is a predetermined standard to be met; and how an individual’s inputs can contribute.

Divisible Task

A task that can be broken down into smaller, separate tasks to be completed by different individuals.

Co-Active Task

A task that involves mutual or joint activity, requiring participants to work together actively towards a common goal.