With an increase in total factor productivity in the Solow growth ...

[segrsyd]

With an increase in total factor productivity in the Solow growth model,
 
  A) output decreases temporarily and returns to the previous steady state.
  B) output increases temporarily and returns to the previous steady state.
  C) the economy reaches a steady state with higher output.
  D) the economy reaches a steady state with lower output.

Question 2

Under monetary stabilization policy in the New Keynesian model, following a drop in output, the central bank should
 
  A) increase the price level.
  B) decrease the price level.
  C) increase the interest rate.
  D) decrease the interest rate.

[Cheesycrackers]

Answer to Question 1

C

Answer to Question 2

D