In new Keynesian theory, the pattern of inflation exhibited by an economy with growing aggregate demand known as inflation dynamics is
A) initially sluggish upward adjustment of the price level and inflation in response to higher aggregate demand followed by higher inflation in the future.
B) initially sluggish downward adjustment of the price level and inflation in response to higher aggregate demand followed by lower inflation in the future.
C) initially speedy upward adjustment of the price level and inflation in response to higher aggregate demand followed by lower inflation in the future.
D) initially speedy upward adjustment of the price level and inflation in response to higher aggregate demand followed by higher inflation in the future.
A
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If the FOMC decides to engage in the selling of government bonds, what is the effect on the money supply?
A) a decrease B) an increase C) an initial increase followed by an additional rise when the bonds mature D) no change
For any given increase in spending that is not directly caused by an increase in income, the impact on equilibrium GDP is greater than the initial spending increase
Indicate whether the statement is true or false
An increase in the growth rate of population in a steady-state economy would cause
A) a parallel shift upward in the investment line. B) a pivot up and to the left in the investment line. C) a pivot down and to the right in the investment line. D) a parallel shift downward in the investment line.
Economists generally assume that ____ economic growth is better for society
a. slower b. faster c. stable d. declining