Why Are Aggregate Demand Shocks Not a Good Explanation of Business

question 18

Multiple Choice

Why are aggregate demand shocks not a good explanation of business cycles in the New Keynesian model?

• A) The wage is not constant.
• B) Employment does not fluctuate.
• C) Prices in the model are procyclical.
• D) Consumption is not procyclical.

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Definitions:

Implied Partnership

A partnership arrangement that is not formally expressed but is inferred from the conduct, relationship, and actions of those involved, indicating a mutual business operation.

Court Liability

The potential obligation or requirement for a party to respond to or remedy a situation as determined by a court decision.

Alleged Partner

is a term used to describe someone who is claimed or said to be a partner in a business or venture, often without formal proof.

Ownership of Property

The legal right or title to possess, use, and control an asset or property.