According to New Keynesians, Which of the Following Is a Key

question 250

Multiple Choice

According to New Keynesians, which of the following is a key factor that determines the inflation rate?

• A) anticipated future inflation
• B) fiscal policy
• C) supply shock
• D) the menu cost

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Definitions:

Demand Elasticity

A metric for assessing the reaction of a good's demanded quantity to its price adjustments.

Income Elasticity

A measure of how the demand for a good or service changes with a change in consumers' income.

Normal Good

A type of good for which demand increases when consumer income rises, and decreases when consumer income decreases.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to normal goods.