Two Key Assumptions of New Keynesian Theory Include

question 87

Multiple Choice

Two key assumptions of new Keynesian theory include:

• A) (1)people hold rational expectations,and (2)wages and prices are not completely flexible in the short run.
• B) (1)people hold adaptive expectations,and (2)wages and prices are inflexible.
• C) (1)people hold rational expectations,and (2)wages and prices are flexible.
• D) (1)people hold neither adaptive nor rational expectations and (2)prices are inflexible.
• E) none of the above

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Definitions:

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Broaden-and-build Theory

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