In the Keynesian model, money is
A) neutral in both the short run and the long run.
B) neutral in neither the short run nor the long run.
C) neutral in the short run, but not in the long run.
D) neutral in the long run, but not in the short run.
D
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According to the rational expectations school, if the Fed announces a policy of rapid growth in the money supply, but then puts the brakes on money expansion without any announcement, which of the following is likely to be the short-run result?
a. An unexpected surge in aggregate demand b. An unexpected drop in aggregate demand. c. An anticipated surge in aggregate demand. d. An anticipated drop in aggregate demand. e. No change in aggregate demand.
An exchange rate that is set by official government policy is called a ________ exchange rate.
A. nominal B. flexible C. fixed D. real