Macro- & Monetary Economics

Prio: Normal, Part II: Keynes, Type: MC, Quiz 2

In the Keynesian sticky wage model, a rise in the price level

  • Never has an effect on output demand because there is always crowding out
  • Has a negative effect on aggregate demand because goods become more expensive
  • Has a negative effect on aggregate demand because money demand and the real interest rate rise
  • Has a positive effect on aggregate demand because the real wage falls, employment rises, and hence consumption rises
 

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