The new Keynesian view is that when the economy is NOT in a liquidity trap:
A) monetary policy is more effective than fiscal policy.
B) fiscal policy is more effective than monetary policy.
C) crowding out will not occur.
D) time lags are minimized.

Question

Quizplus · Accepted Answer

The new Keynesian view posits that when the economy is not in a liquidity trap, monetary policy is generally more effective than fiscal policy in influencing economic activity, as it can more directly and quickly affect interest rates and liquidity.

The New Keynesian View Is That When the Economy Is