According to New Keynesian Theory, an Increase in Financial Frictions

question 34

Multiple Choice

According to new Keynesian theory, an increase in financial frictions might lead to ________, if ________.

• A) a smaller decrease in output; expected inflation is reduced
• B) a larger decrease in output; expected inflation rises
• C) a decrease in inflation; the disruption of capital markets results in a leftward shift of long-run aggregate supply
• D) a smaller decrease in output; a decline in expected output causes a leftward shift of aggregate demand

---

Definitions:

Infringement

The action of breaking the terms of a law, agreement, or right, especially concerning intellectual property.

Interlocutory Injunction

A court order issued before a trial to stop an ongoing injury.

Anton Piller Order

A court order that allows for the search of premises and the seizure of evidence without prior warning, typically used to prevent the destruction of evidence.

Permanent Injunction

A court order that permanently requires an individual or entity to either cease a specific activity or perform a specific act indefinitely into the future.