The Difference Between the New Classical Theory and the New

question 71

Multiple Choice

The difference between the new classical theory and the new Keynesian theory is the assumption of

• A) rational expectations.
• B) adaptive expectations.
• C) complete flexibility of wages and prices in the short run.
• D) a and c
• E) b and c

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Definitions:

Eardrum

A thin, cone-shaped membrane that separates the external ear from the middle ear, and vibrates in response to sound waves.

Taste Buds

Sensory organs located on the tongue that are responsible for perceiving and differentiating flavors.

Temporal Lobe

A region of the cerebral cortex located beneath the temples, associated with processing auditory information and encoding memory.

Frontal Lobe

The part of the brain located at the front of the skull, responsible for important cognitive skills such as emotional expression, problem solving, memory, language, judgment, and sexual behaviors.