If the federal funds rates falls less than expected, then output falls under the
A) new classical model.
B) new Keynesian model.
C) both of the above.
D) none of the above.

Name: If the federal funds rates falls less than expected, then output falls under the A) new classical model. B) new Keynesian model. C) both of the above. D) none of the above.
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Question

Quizplus · Accepted Answer

In the new classical model, output is determined by real factors and not by monetary policy, so unexpected changes in interest rates can affect output.

If the Federal Funds Rates Falls Less Than Expected, Then