In the model with Keynesian sticky wages and prices, if the representative consumer is working too much given the market real wage, then
A) The monetary authority should take actions that will reduce the price level.
B) The monetary authority should take actions that will increase the price level.
C) The competitive equilibrium is Pareto optimal.
D) The representative firm should be taxed.
E) The representative consumer should change his or her preferences.
Correct Answer:
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