True Or False. explain the answer

1. In the Basic New Keynesian model, a firm that cannot change its price will

produce a level of output above the market clearing output level.

2. In the Lagos-Wright model, a Pareto optimal allocation has the property that the

marginal utility of consumption for the buyer is one.

3. In the New Keynesian Rational Expectations Model, in the output demand

relationship the difference between current output and future output increases

when the actual real interest rate increases.

4. Under fiscal stabilization policy in the New Keynesian sticky price model, after a

negative shock to output, the government increases expenditures and the central

bank decreases the money supply.

5. If the economy is currently at the bliss point in the Basic New Keynesian model,

an optimal monetary policy response to negative shock to output supply will

result in real interest rate below the natural rate, a negative output gap and

inflation below the target.

6. If there is destruction of some of the capital stock in the New Keynesian sticky

price model, and there is no response in monetary or fiscal policy, then

consumption will increase in the long-run.

7. If the real interest rate is zero, this corrects the distortion caused by long-run

inflation.