In the New Keynesian model, if there are shocks to government spending, and the central bank always reduces the output gap to zero,
A) the model replicates the key business cycle facts.
B) consumption is countercyclical.
C) employment is countercyclical.
D) investment is procyclical.
E) the money supply is constant.
Correct Answer:
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Q36: Compared to monetary policy, fiscal policy leads
Q37: Crowding out of private expenditure occurs when
A)
Q38: In the New Keynesian model, an increase
Q39: If a shock results in a positive
Q40: Changes in the money supply in the
Q42: In the New Keynesian model, an increase
Q43: Negative nominal interest rates work because
A) they
Q44: In the New Keynesian model, an increase
Q45: If the central bank in a New
Q46: A traditional liquidity trap is problematic for
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