According to the New Keynesian model, after a negative shock to output, efficiency could be restored quickly if A. the govermment decreases expenditures or the central bank increases its target rate. B. the govemment decreases expenditures or the central bank decreases its target rate. C. the govemment increases expenditures or the central bank decreases its target rate. D. the government leaves expenditures unchanged and the central bank decreases the money supply. E. the government increases expenditures or the central bank increases its target rate.

According to the New Keynesian model, after a negative shock to output, efficiency could be restored quickly if A. the govermment decreases expenditures or the central bank increases its target rate. B. the govemment decreases expenditures or the central bank decreases its target rate. C. the govemment increases expenditures or the central bank decreases its target rate. D. the government leaves expenditures unchanged and the central bank decreases the money supply. E. the government increases expenditures or the central bank increases its target rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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