In the New Keynesian View a Decline in Consumer Confidence

question 23

Multiple Choice

In the new Keynesian view a decline in consumer confidence that leads to a shift left in the AD curve

• A)will cause output to fall in the short run, but not in the long run.
• B)will cause output to fall in both the short run and the long run.
• C)will not cause output to fall in either the short run or the long run.
• D)will cause output to fall only if prices are fully flexible.

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