Question from Past Macroeconomics Qualifying Exam (Fall, 2002 - Question five) at George Mason University[]

How would a one-time increase in the price level affect output according to:

  • a. A neoclassical model with rational expectation?
  • b. A standard Keynesian model?
  • c. A neo-Keynesian model with real rigidities in financial markets?
  • d. A monetarist model?
  • e. Have any of these models been empirically successful in explaining the relationship between price level increases and output? Explain.


  • a.
  • b.
  • c.
  • d.
  • e.

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