1) The new Keynesian model has ________ in common with the real business cycle model. A) wage and price stickiness B) a theory of aggregate demand C) procyclical inflation D) a microeconomic foundation 2) In the new Keynesian model, sticky prices may be due to ________. A) involuntary unemployment. B) negative productivity shocks. C) positive productivity shocks. D) staggered prices. 3) In the new Keynesian model, expected inflation is a function of ________. A) expected future output gaps and markup shocks B) current and past inflation C) unanticipated aggregate demand shocks D) expected growth of the money supply 4) The standard IS curve is adjusted in new Keynesian theory to account for ________. A) the forward-looking behavior of households and firms. B) the difference between real and nominal variables. C) changes in GDP, or Gross Domestic Product. D) the impact of a rising national debt. 5) In the new Keynesian model, an increase in productivity will cause ________. A) a leftward shift in short-run and long-run aggregate supply. B) a rightward shift in short-run and long-run aggregate supply. C) a leftward shift in short-run aggregate supply and rightward shift in long-run aggregate supply D) a rightward shift in short-run aggregate supply and a leftward shift in long-run aggregate supply. 6) In the new Keynesian model, an ________ increase in productivity will impact ________. A) unanticipated; both aggregate demand and aggregate supply B) anticipated; both aggregate demand and aggregate supply C) anticipated; aggregate demand, but not aggregate supply D) unanticipated; aggregate demand, but not aggregate supply 7) Shocks to long-run aggregate supply can be a source of business fluctuations ________. A) only in real business cycle models. B) only in new Keynesian models. C) in both real business cycle and new Keynesian models. D) only if the money supply rises. 8) In the new Keynesian model, a positive, permanent supply shock will result in ________. A) an increase in aggregate demand B) a decrease in aggregate demand C) no change in aggregate demand D) a change in aggregate demand, only if the shock is anticipated 9) In the new Keynesian model, if an aggregate demand increase is unanticipated, then ________. A) aggregate demand will not change. B) short-run aggregate supply will shift up immediately C) short-run aggregate supply will shift down immediately D) there is no immediate effect on the short-run supply curve 10) In the new Keynesian model, if an aggregate demand increase is anticipated, then ________. A) aggregate demand will not change. B) short-run aggregate supply will shift up immediately C) short-run aggregate supply will shift down immediately D) there is no immediate effect on the short-run supply curve