In the Model with Keynesian Sticky Wages and Prices, a Decrease

Multiple Choice

In the model with Keynesian sticky wages and prices, a decrease in government spending may decrease output more than one-for-one because

A) the decrease in government spending may worsen inefficiency.
B) more government spending is always desirable.
C) the First Welfare Theorem holds.
D) government spending changes the behaviour of the monetary authority.
E) consumption increases.