What Fundamental Problem Does the New Keynesian Model Have,when Compared

question 4

Multiple Choice

What fundamental problem does the New Keynesian model have,when compared to the data?

• A) Investment fluctuates more than consumption.
• B) The real wage moves too little.
• C) Aggregate output demand does not matter.
• D) Prices do not fluctuate in the right way.

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Definitions:

Clastic Rocks

Sedimentary rocks composed of fragments, or clasts, of pre-existing minerals and rocks that have been transported, deposited, and lithified.

Turbidity Current

A current in water or air that moves downward because it is more dense than the adjacent water or air, especially applied to a swift, bottom-flowing current of water and suspended sediment on the seafloor or the bottom of a lake.

Continental Shelf

A gently sloping, relatively shallow area of seafloor that flanks a continent and is underlain by thinned continental crust.

Clastic Rocks

Sedimentary rocks composed of fragments of pre-existing rocks, transported and deposited by water, wind, or ice.