Long-Run Aggregate Supply Shocks Are Not a Source of Business

question 46

Multiple Choice

Long-run aggregate supply shocks are not a source of business cycle fluctuations in the ________,because ________.

• A)traditional Keynesian model;long-run supply shocks are incompatible with adaptive expectations
• B)traditional Keynesian model;demand fluctuations are considered of dominant importance
• C)real business cycle model;shocks cannot persist in the long run,when prices and wages are flexible
• D)new Keynesian model;such shocks are anticipated by forward-looking consumers and firms

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