The economy is in long-run equilibrium when there is a correctly anticipated increase in aggregate demand. In new Keynesian theory, the price level will rise __________ in the short run than it is predicted to rise in new classical theory
A) by more
B) by less
C) by the same amount
D) faster
E) slower
B
You might also like to view...
Suppose the demand for Pepsi-Cola is qp = 50 - 2pp + 1pc. The firm faces a constant marginal cost of m, and pc denotes the price of Coca-Cola
Assuming Bertrand behavior, derive Pepsi-Cola's best-response function and explain how the firm changes price in response to changes in its own marginal cost and changes in Coca-Cola's price.
Shelly purchases a leather purse for $400. One can infer that:
A. her reservation price was exactly $400. B. she paid too much. C. her reservation price was less than $400. D. her reservation price was at least $400.
An increase in the U.S. demand for Japanese yen causes
A) an increase in the dollar price of a yen. B) an increase in the yen price of a dollar. C) an increase in the demand for U.S. goods. D) a decrease in the supply of yens.
In the Full Employment and Balanced Growth Act of 1978,
A. An unemployment goal of 4 percent was set, but no inflation goal could be set. B. The president set an inflation goal of 0 percent. C. Alan Greenspan set an inflation goal of 0 percent. D. Congress set an inflation goal of no more than 3 percent.