Which of the Following Theories Might the New Keynesians Use

question 29

Multiple Choice

Which of the following theories might the new Keynesians use to explain wage rigidity?

• A) permanent income hypothesis
• B) labor theory of value
• C) law of diminishing returns
• D) implicit contract theory
• E) quantity theory of money

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Definitions:

National Debt

The total amount of money that a country's government has borrowed, by various means, to fund its expenditures beyond what it collects in taxes.

Decreasing Rate

A situation where the rate or speed of a process or value is diminishing over time.

Full Employment GDP

An economic condition where all available labor resources are being used in the most efficient way possible, reflecting the highest level of economic output.

Unemployment Level

The fraction of working-age individuals without a job, yet actively trying to find one.