Under the Assumptions of the New Keynesian Model,an Increase in Aggregate

question 140

Multiple Choice

Under the assumptions of the new Keynesian model,an increase in aggregate demand will

• A)increase prices and output in the short-run.
• B)lead to a decrease in unemployment and an increase in prices in the short run.
• C)lead to an increase in the nominal wage rate in the long run and a decrease in unemployment in the short run.
• D)All of the above are correct.

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Definitions:

Standard Hours Allowed

The amount of work time allowed for the completion of a task, against which actual hours are compared for performance analysis.

Direct Labor-Hours

Total time directly invested in the creation of a product or the provision of a service.

Variable Overhead Efficiency Variance

A measure used to evaluate the efficiency of variable overhead resources used in production relative to the standard consumption expected.

Particular Product

A specific good or service offered by a company, distinct from other offerings within its product line.