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 central bank's attempt to prevent an appreciation of its currency can stimulate domestic inflation if the ________ of its currency leads to ________ international reserves which ________ the monetary base

A) purchase; higher; increases B) purchase; lower; decreases C) sale; lower; decreases D) sale; higher; increases

When break-even investment is subtracted from investment per worker, the result is

A) the change in the capital-labor ratio. B) saving. C) the steady state. D) capital stock dilution.