Both the New Classical and New Keynesian Business Cycle Theories

question 134

Multiple Choice

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

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

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Definitions:

Belt Of Stability

A concept in nuclear physics that describes the combination of neutron and proton numbers in atomic nuclei which makes them more stable.

Stable Isotopes

Variants of elements that have a stable nucleus and do not undergo radioactive decay over time.

Unstable Isotopes

Atoms with a nucleus that has an excess of energy or mass, making them decay into more stable forms over time.

Stable Isotopes

Variants of elements that have the same number of protons but different numbers of neutrons, and do not undergo radioactive decay.