The Model That Assumes That Expectations Are Formed Rationally but Does

question 22

Multiple Choice

The model that assumes that expectations are formed rationally but does not assume complete wage and price flexibility is known as the

• A)new classical model.
• B)Keynesian model.
• C)monetarist model.
• D)new Keynesian model.

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Definitions:

Quantity

The amount or number of a material or immaterial good that is considered disposable or usable.

Income Elasticity of Demand

Income elasticity of demand measures how the quantity demanded of a good or service changes in response to a change in consumers' income.

Quantity Demanded

In economics, the total amount of a good or service that consumers are willing and able to purchase at a given price.

Income

The financial gain received by an individual or household, usually derived from work, investments, or other sources, over a period.