How Do Rational Expectations Models Differ from Traditional Classical Economics

question 175

Essay

How do rational expectations models differ from traditional classical economics? How does the new Keynesian model differ from the traditional Keynesian view?

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Definitions:

Media Richness

The capacity of a communication medium to effectively convey information and promote understanding, often depending on its ability to handle multiple cues, facilitate feedback, and establish personal focus.

Uncertainty

The state of having limited knowledge or lack of sureness about the present or future, often causing stress or indecision.

Ambiguity

The quality of being open to more than one interpretation; lack of clearness or definiteness in meaning or intention.

Face-To-Face

Direct interaction between people in the same physical location, promoting more personal communication and connection.