Under Fiscal Stabilization Policy in the New Keynesian Model,after a Positive

Multiple Choice

Under fiscal stabilization policy in the New Keynesian model,after a positive 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.