According to the new Keynesian view, upturns and downturns in economic activity
A)may represent times when the economy is not at its long-run equilibrium.
B)are always the result of unexpected changes in the money supply.
C)cannot be offset by stabilization policy.
D)are unrelated to movements in aggregate demand.

Question

Quizplus · Accepted Answer

According to the new Keynesian view, upturns and downturns in economic activity may represent times when the economy is not at its long-run equilibrium. This can be due to various factors such as temporary shocks, changes in expectations, or other disturbances that can push the economy away from its potential output. Therefore, stabilization policies can be used to offset these fluctuations and bring the economy back to its long-run equilibrium.

According to the New Keynesian View, Upturns and Downturns in Economic