According to the New Keynesian Approach, Output Fell During the Early

question 78

Multiple Choice

According to the new Keynesian approach, output fell during the early 1980s because

• A)fiscal policy was sufficiently contractionary to offset an expansionary monetary policy.
• B)the leftward shift of the AD curve was greater than the rightward shift of the SRAS curve.
• C)consumers and businesses came to expect higher inflation, thereby causing the SRAS curve to shift to the left.
• D)Congress and the President decided to raise taxes and cut spending in order to reduce the budget deficit.

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Definitions:

Illicit Drug

A substance whose production, sale, or use is prohibited by law, often associated with addiction and illegal trade.

Endorphins

Natural chemicals in the body that fight pain and promote feelings of pleasure and well-being.

Marijuana

A psychoactive drug from the Cannabis plant used primarily for medical or recreational purposes.

Suprachiasmatic Nucleus

A small region of the brain in the hypothalamus, responsible for controlling circadian rhythms.