Mariann the economist argues that expectations are formed rationally, yet a pre-announced monetary expansion will lower unemployment. Mariann is probably a
A) Keynesian economist.
C) new classical economist.
D) new Keynesian economist.
11) Kristin the economist argues that an anticipated monetary expansion will cause aggregate output to increase but believes that aggregate output would increase by an even greater amount if the monetary expansion came as a surprise to everyone. Kristin is probably a
A) new Keynesian.
B) new classical economist.
D) Keynesian economist.
12) In the new Keynesian model, explain and depict graphically why an expected increase in the money supply increases real output in the short run. What is the long-run result?
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