The New Classical Model States That a

question 124

Multiple Choice

The new classical model states that a

• A) budget surplus will effectively retard inflation that comes from excess demand.
• B) budget deficit will have no impact on real interest rates.
• C) budget deficit will increase the real interest rate.
• D) substitution of debt for tax financing will increase aggregate demand and real output.

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Definitions:

Cognitive Dissonance

A psychological state that occurs when an individual holds two or more contradictory beliefs, ideas, or values at the same time, often leading to discomfort and a drive to reduce the inconsistency.

Social Pressure

The influence that is exerted by society or a social group on an individual, encouraging conformity to social norms or expectations.

Mass Killing

The intentional and indiscriminate murder of a large number of people by individuals, groups, or state agents.

Publicized Celebrity Suicide

A widely broadcasted event of a famous individual taking their own life, often leading to increased public awareness and discussion on mental health.