According to the New Keynesian Approach, Output Fell During the Early

Multiple Choice

According to the new Keynesian approach, output fell during the early 1980s because

A) fiscal policy was sufficiently contractionary to offset an expansionary monetary policy.
B) the leftward shift of the AD curve was greater than the rightward shift of the SRAS curve.
C) consumers and businesses came to expect higher inflation, thereby causing the SRAS curve to shift to the left.
D) Congress and the President decided to raise taxes and cut spending in order to reduce the budget deficit.