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Let Aggregate Demand Be Summarized by Y = k0

Question 31

Multiple Choice

Let aggregate demand be summarized by Y = k0 + k1M - P) and aggregate
Supply by P = P^
^
+ cY - Y*) . All notation is standard but for , which here
Represents forecasted general prices. A change in the responsiveness of firms' prices to expectations is captured by a change in


A) only c.
B) only k1.
C) only k0.
D) both k0 and k1.
E) none of the above.

Correct Answer:

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