According to Real Business Cycle Theory,an Increase in Financial Frictions

question 66

Multiple Choice

According to real business cycle theory,an increase in financial frictions might lead to ________,if ________.

• A)a decrease in output;the rise in the credit spread causes a leftward shift of aggregate demand
• B)a decrease in inflation;the disruption of capital markets results in a leftward shift of long-run aggregate supply
• C)a decrease in output;the disruption of capital markets results in a leftward shift of long-run aggregate supply
• D)a decrease in output;a decline in expected output causes a leftward shift of aggregate demand

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