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:

Loan Papers

Documents associated with a loan, including the agreement, terms and conditions, and any collateral-related paperwork.

Certificates Of Deposit

A type of federally insured savings account that has a fixed interest rate and fixed date of withdrawal, known as the maturity date.

Compounded Quarterly

The process of calculating interest on both the initial principal and the accrued interest over four quarters in a year.

Semi-annually

Occurring twice a year, typically used in the context of payments, compounding, or reporting periods.