Both the New Classical and New Keynesian Business Cycle Theories

question 103

Multiple Choice

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

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

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Definitions:

Production Blocking

Reduction in individual creativity and productivity in brainstorming groups due to interruptions and turn-taking.

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group compared to when they work alone.

Evaluation Apprehension

Evaluation apprehension is the anxiety or concern individuals may feel when they believe they are being judged or evaluated by others, affecting performance and behavior.

Production Blocking

A phenomenon in group brainstorming where the flow of ideas is inhibited because only one participant can speak at a time.