The New Classical Model Has as Its Central Idea That

question 266

Multiple Choice

The new classical model has as its central idea that

• A)wage and price stickiness explains fluctuations in real GDP.
• B)workers and firms have rational expectations.
• C)the Federal Reserve should adopt a monetary growth rule.
• D)shifts in aggregate demand have no impact on real GDP.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales activity within a certain range and period, such as rent, salaries, and insurance.

Cafeteria

A type of food service location within an institution where customers serve themselves from a variety of dishes made available.

Transfer Prices

Prices used for the sale or transfer of goods and services between departments or divisions within the same company.

Division X

A specific unit, department, or branch of a company, often referred to by a placeholder name "X" for confidentiality or naming purposes.