The Key Difference Between the New Classical Theory of the Business

question 190

Multiple Choice

The key difference between the new classical theory of the business cycle and the new Keynesian theory of the business cycle is that the new classical theory believes that__________ while the new Keynesian theory believes that __________.

• A) only unexpected changes in aggregate demand will change real GDP; both expected and unexpected changes in aggregate demand will change real GDP
• B) expected changes in aggregate demand will change real GDP; expected changes in aggregate demand will not change real GDP
• C) only unexpected changes in aggregate demand will change real GDP; only expected changes in aggregate demand will change real GDP
• D) the short-run aggregate supply curve is horizontal; the short-run aggregate supply curve is vertical.

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Definitions:

Frederic Bartlett

A pioneering cognitive psychologist known for his work on memory and cognitive schemas.

Unfamiliar Stories

Narratives or tales that are not previously known to the listener or reader, often used in psychological research to assess comprehension and memory.

Coherent

Logically connected or consistent in argument or presentation.

Wrongful Conviction

The conviction of a person for a crime they did not commit, often due to errors in the legal process.