In the New Keynesian Model,if an Aggregate Demand Increase Is

question 28

Multiple Choice

In the new Keynesian model,if an aggregate demand increase is unanticipated,then ________.

• A)aggregate demand will not change
• B)short-run aggregate supply will shift up immediately
• C)short-run aggregate supply will shift down immediately
• D)there is no immediate effect on expectations about future inflation

---

Definitions:

Volatile Interest Rates

Interest rates that fluctuate frequently and unpredictably, often affecting borrowing and saving costs.

Equity

Represents the value of an ownership interest in a company, often expressed as share capital or stock, reflecting the residual interest in the assets of the entity after deducting liabilities.

Current Liabilities

Current liabilities are financial obligations a company owes and is expected to pay within one year or within its operating cycle, whichever is longer.