In the new Keynesian view, a disinflation policy
A)will almost always result in a recession.
B)will rarely be credible.
C)should use the cold turkey, rather than the gradual, approach.
D)shifts the LRAS curve.

Question

Quizplus · Accepted Answer

In the new Keynesian view, a disinflation policy (a policy aimed at reducing inflation) often leads to a recession because reducing inflation typically involves slowing down the economy, which can result in higher unemployment and reduced economic activity in the short term.

In the New Keynesian View, a Disinflation Policy