According to the Keynesian model,a decline in the expected price level
A)will increase the inflation rate a central bank must generate to achieve a target level of unemployment.
B)will decrease the inflation rate a central bank must generate to achieve a target level of unemployment.
C)will not affect the inflation rate a central bank must generate to achieve a target level of unemployment.
D)will not impact the effectiveness of monetary policy.

Question

Quizplus · Accepted Answer

According to the Keynesian model, a decline in the expected price level will lead to a decrease in the aggregate demand and a decrease in the level of inflation. Therefore, a central bank will need to generate a lower inflation rate to achieve a target level of unemployment.

According to the Keynesian Model,a Decline in the Expected Price