Both the New Keynesians and Traditional Keynesians Would Disagree with Which

question 68

Multiple Choice

Both the new Keynesians and traditional Keynesians would disagree with which of the following ideas?

• A) Prices and wages tend to adjust slowly in the short run.
• B) Real GDP adjusts to changes in aggregate demand.
• C) Discretionary monetary and fiscal policies are necessary to keep the economy stabilized.
• D) Changes in business and consumer spending represent a substantial source of economic instability.
• E) Markets clear continuously.

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Definitions:

Extreme Forecasts

Predictions about financial markets or economic conditions that significantly deviate from consensus views.

Recent Experience

Refers to the impact of freshly encountered information or events on an individual's decisions or perceptions.

Mean-Variance Efficiency

A concept in portfolio theory that suggests an investment is efficient if it offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Risk-Adjusted Returns

A measure that puts the returns of an investment into perspective by taking into account the level of risk involved in producing those returns.