Multiple Choice
Which of the following statements correctly describes the New Keynesian view of the response of the price level to changes in the money supply?
A) The price level is unrelated to the money supply.
B) The price level increases in proportion to increases in the money supply in the short run.
C) The price level adjusts slowly to changes in the money supply.
D) The price level is sticky in the long run, and thus doesn't fully respond to changes in the money supply.
Correct Answer:
Verified
Correct Answer:
Verified
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