The main difference between neoclassical (RBC) and Keynesian models is that the neoclassical models:
- focus on the role of money in the economy.
- focus on the aggregate supply curve in explaining the causes of economic cycles.
- assume that prices adjust slowly, whereas Keynesians assume that prices adjust quickly.
If you check the core it is only neoclassical economics.So what does neoclassical economics say
Neoclassical theories focus is on the aggregate supply the theory say that market will reach equilibrium because of the invisible hand or free market and it also say there is no government intervention required
Whereas keyensian school of thought is that the government intervention is required and there should be focus on aggregate demand.The AD shift because of 10 15 reasons which is already written in your copy
Let suppose AD shift to the left then the government should use expansionary monetary or fiscal policy to keep capitaland labor employed een if this means a large fiscal deficit
So option B is correct for this question
For further clarification i am attaching that part from core
Thank you ! sir