New Keynesian inflation dynamics predicts that an increase in aggregate demand will generate, in chronological order
A. a rightward shift in a vertical short-run aggregate supply curve, a short-run increase in real Gross Domestic Product (GDP), an upward movement along the short-run aggregate supply curve, and an increase in the price level.
B. an leftward shift in a vertical short-run aggregate supply curve, a short-run decline in real Gross Domestic Product (GDP), an upward movement along the short-run aggregate supply curve, and an increase in the price level.
C. a leftward movement along a horizontal short-run aggregate supply curve, a short-run decline in real Gross Domestic Product (GDP), a downward shift in the short-run aggregate supply curve, and a decrease in the price level.
D. a rightward movement along a horizontal short-run aggregate supply curve, a short-run increase in real Gross Domestic Product (GDP), an upward shift in the short-run aggregate supply curve, and an increase in the price level.
Answer: D
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When a monopolistically competitive firm is in long-run equilibrium:
A. P = MC = ATC. B. MR = MC and minimum ATC > P. C. MR > MC and P = minimum ATC. D. MR = MC and P > minimum ATC.