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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