A central bank can bring output back up to efficient level in the New Keynesian model by
A) decreasing the money supply.
B) increasing the money supply.
C) decreasing government expenses.
D) increasing government expenses.
Question 2
A firm possesses too much capital if ________.
A) the real rental cost of capital is equal to the marginal product of capital
B) the real rental cost of capital is less than the marginal product of capital
C) its investment spending exceeds its consumption outlays
D) the real rental cost of capital is more than the marginal product of capital
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