In the New Keynesian Model, assume that the goal of The Fed is to keep unemployment as low aspossible. What is the appropriate response to a negative real shock? a.Increase the money supply, shifting DAD to the left b.Buy bonds, shifting DAD to the right c.Sell bonds, shifting DAD to the left d.Decrease the money supply, shifting DAD to the left e.None of the above

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You have a two year agreement with Netflix for $11.99/month and Amazon Prime for $12.99/month. If an economic expansion occurs during this time and aggregate demand rises, a. Sticky prices like Netflix and Amazon suggest there will be no GDP growth in the New Keynesian Model short-run. b. Fixed price contracts like Netflix and Amazon imply that inflation will be higher in the long-run if the demand shock is permanent. c. The RBC model predicts higher long-run economic growth following this aggregate demand shift. d. None of the above. e. All of the above.

Musashi plays the cello as part of a string duo and advertises booking opportunities using brochures he distributes in coffee shops around the city. Making one grayscale brochure costs $0.02, but adding color increases the cost to $0.08 per brochure. Musashi sets aside a monthly budget of $14.00 for creating brochures. The following graph shows three of Musashi's indifference curves for the number of grayscale and color brochures that he makes. Use the green line (triangle symbol) to plot Musashi's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Musashi's optimal consumption choice given that budget constraint. GRAYSCALE BROCHURES 1000 900 800 700 600 500 400 300 200 100 2 0 0 25 50 75 100 125 150 175 200 225 COLOR BROCHURES 250 Budget Constraint Optimum ?. At the optimum that you indicated on the graph, Musashi's marginal rate of substitution is equal to 4 brochures color. in grayscale per brochure in