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Ao9 Ao9
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8 years ago
Consider two alternative worlds: (i) the world works according the real business cycle model, and the central bank acts to stabilize the price level; (ii) the world works according to the New Keynesian sticky price model, and the central bank acts to make the output gap zero. Which is correct?
A) in either world, the central bank is irrelevant.
B) We would prefer to live in world (i).
C) We would prefer to live in world (ii).
D) The data cannot tell us whether we are living in world (i) or world (ii).
Textbook 
Macroeconomics

Macroeconomics


Edition: 5th
Author:
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GordisGordis
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8 years ago
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Ao9 Author
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#2
8 years ago
You're sharp, thanks!
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#3
8 years ago
Please mark it solved once you get a chance.
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