New Keynesian Economics

question 118

Multiple Choice

New Keynesian economics

• A) favor stabilization policies that shift the short-run aggregate supply curve to keep the economy operating close to its potential output.
• B) advocates policies that increase wage and price flexibility so that the economy can self-correct quickly.
• C) stresses the stickiness of prices and the need for activist stabilization policies through the aggregate demand management policies to move the economy to its potential output.
• D) stresses the importance of operating at potential output and with shifting the long-run aggregate supply curve to the right.

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Definitions:

Inventory Destroyed

Refers to stock items that have been damaged, expired, or cannot be sold, leading to a loss for the business.

Typical Gross Profit

The average gross profit a company makes after subtracting the cost of goods sold from its net sales.

FOB Shipping

Free On Board Shipping, a term used in shipping agreements to specify which party (buyer or seller) pays for shipping costs and when the ownership of the goods transfers.

Import Duties

Import duties are taxes imposed by a government on goods imported into a country, often used to protect domestic industries and raise revenue.