Which of the Following Is True from the New Keynesian

question 85

Multiple Choice

Which of the following is true from the New Keynesian perspective?

• A)Fluctuations in private spending does not affect aggregate demand in an economy.
• B)Investment spending remains relatively constant irrespective of the supply shocks.
• C)Fluctuations in aggregate demand are not the primary source of problems for policymakers.
• D)The government should limit its role to administrative functions.
• E)Monetary and fiscal policies often fail to restore macroeconomic equilibrium.

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Definitions:

Inability

The state of being unable to perform a function or action due to physical or mental limitations.

Recall

The mental process of retrieving information from the past.

Primacy Effect

The tendency to remember information at the beginning of a list better than information in the middle or at the end.

Recency Effect

A cognitive bias that inclines individuals to remember and give greater importance to the most recent information or experiences.