Multiple Choice
In the New Keynesian model,the stabilization effects of fiscal and monetary policy are different because
A) the effects on the composition of output are different.
B) monetary policy does not work in a liquidity trap, but fiscal policy does.
C) monetary policy affects spending on goods indirectly; fiscal policy affects spending directly.
D) all of the above.
Correct Answer:
Verified
Correct Answer:
Verified
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Q4: What fundamental problem does the New Keynesian
Q5: Suppose real output falls in the aggregate
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Q7: Why is it difficult to determine whether
Q8: The central bank in the New Keynesian
Q9: Under fiscal stabilization policy in the New
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