The New Classical Model Implies That a Shift to a More

question 77

Multiple Choice

The new classical model implies that a shift to a more expansionary fiscal policy (the substitution of debt financing for taxes) will

• A) stimulate aggregate demand and employment.
• B) retard aggregate demand and employment.
• C) increase the real rate of interest.
• D) exert little or no impact on the real interest rate, aggregate demand, and employment.

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Definitions:

Serotonin Nerve Fibers

Neurons that transmit serotonin, a neurotransmitter involved in many functions, including mood regulation, digestion, and the sleep-wake cycle.

Toxic Effects

Harmful effects caused by substances that can lead to health problems or pose a threat to biological organisms.

Adverse Childhood Experiences

Potentially traumatic events that occur in childhood, such as abuse or neglect, which can have long-term effects on health and well-being.

Drug Addiction

A chronic disorder characterized by compulsive drug seeking and use, leading to significant brain changes and behavioral consequences despite harmful effects.