In the New Keynesian model,an increase in the money supply

Question

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In the New Keynesian model, an increase in the money supply leads to an increase in aggregate demand, leading to an increase in output. However, the increase in money supply also increases inflation expectations, which results in an increase in the nominal interest rate. But in the short run, prices are sticky, leading to an increase in the real interest rate (nominal interest rate - inflation rate). Hence, an increase in the money supply leads to an increase in output and a decrease in the real interest rate.

In the New Keynesian Model,an Increase in the Money Supply