Which of the following is true from the perspective of the New Keynesian school of thought?
a. Fluctuations in private spending does not affect aggregate demand in an economy.
b. Investment spending remains relatively constant irrespective of the supply shocks.
c. Fluctuations in aggregate demand are not the primary source of problem for policymakers.
d. The government should limit its role to administrative functions.
e. Monetary and fiscal policies often fail to restore macroeconomic equilibrium.
c
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A change in tax rates
A) has a larger multiplier effect the smaller the tax rate. B) has a less complicated effect on GDP than does a tax cut of a fixed amount. C) will not affect disposable income. D) will not affect the size of the multiplier.