Both the New Classical and New Keynesian Business Cycle Theories

question 57

Multiple Choice

Both the new classical and new Keynesian business cycle theories agree that

• A) the money wage rate is influenced by rational expectations of the price level.
• B) unexpected changes in aggregate demand cannot result in a business cycle.
• C) the long- term nature of wage contracts allow expected changes in the price level to cause business cycles.
• D) expected changes in aggregate demand lead to the business cycle.

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Definitions:

Self-serving

Actions or behaviors motivated primarily by personal gain, often at the expense of others.

Decentralized Network

A network structure where operations are not governed or controlled from a central location, allowing for distributed decision-making and autonomy.

Communication

The process of transferring information, meaning, and understanding from one entity or group to another through the use of mutually understood signs, symbols, and semiotic rules.

Team Cohesiveness

The degree to which team members are connected and committed to working together towards common goals, enhancing performance.