The Main Difference Between the New Keynesian Model and the Basic

question 45

Multiple Choice

The main difference between the New Keynesian model and the basic monetary intertemporal model is that in the New Keynesian model,

• A) the price level is sticky in the short run.
• B) wages are sticky in the short run.
• C) menu costs are insignificant.
• D) firms are backward-looking.
• E) prices adjust quickly to equate the supply and demand for goods.

Comprehend the interaction between demand and supply curves and their shifts.

Identify the role of substitutes and complementary goods in affecting demand.

Understand the impact of income on demand for normal and inferior goods.

Understand the components and utilization of the BCG portfolio planning model.

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Definitions:

Taste Buds

Structures along the sides of many of the tongue’s papillae that are composed of 60 to 100 receptor cells for taste.

Olfactory Receptors

Specialized nerve cells located in the nasal cavity that are responsible for the detection of odor molecules, contributing to the sense of smell.

Papillae

Small, nipple-like structures on the tongue where taste buds reside, playing a key role in the sense of taste.

Taste Buds

Small sensory organs found on the tongue, capable of detecting the five types of tastes: sweet, sour, salty, bitter, and umami.