According to the hypothesis of New Keynesian inflation dynamics, an increase in aggregate demand brings about
A) initial sluggish adjustment of the price level followed by higher inflation later on.
B) initial rapid adjustment of the price level followed by lower inflation later on.
C) initial sluggish adjustment of real GDP followed by more rapid real GDP growth later on.
D) sluggish growth in real GDP both initially and later on.
A
You might also like to view...
Which of the following statements is FALSE about the issues faced by the government when contemplating a tax?
A) Consideration must be given to how tax rates relate to the amount actually received. B) Consideration must be given to how taxes influence market prices. C) Consideration must be given to how taxes influence equilibrium quantity. D) Consideration must be given to the amount of funds the government will be receiving from the transfer payments paid by the public to the government.
Mr. Peabody chooses to invest in companies that produce goods and services based on consumer preferences. Mr. Peabody is investing in companies that are attempting to be
A) allocatively efficient. B) productively efficient. C) guaranteed to make a profit. D) all of the above.