Suppose that there is an increase in the demand for money. What is the appropriate monetary policy response in the New Keynesian sticky price model?
A) an increase in the interest rate target
B) no change in the interest rate target
C) a decrease in the interest rate target
D) an increase in government spending
Correct Answer:
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Q1: According to New Keynesian theory,fluctuations in the
Q2: A price may be sticky because
A) of
Q3: In the New Keynesian model,
A) money is
Q5: Why is it difficult to determine whether
Q6: Active stabilization policy can be rationalized in
Q7: A money supply increase in the New
Q8: What fundamental problem does the New Keynesian
Q9: Menu costs are
A) very small costs.
B) the
Q10: In the New Keynesian model,the central bank
Q11: What do we need to assume about
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