Under fiscal stabilization policy in the New Keynesian model, after a
Under fiscal stabilization policy in the New Keynesian model, after a negative shock to output,
A) the government increases expenditures and the central bank increases the money supply.
B) the government increases expenditures and the central bank decreases the money supply.
C) the government decreases expenditures and the central bank increases the money supply.
D) the government decreases expenditures and the central bank decreases the money supply.
ANSWER
A
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