Which of the Following Statements Accurately Expresses the Assumptions on Which

question 29

Multiple Choice

Which of the following statements accurately expresses the assumptions on which new Keynesian and new classical theory are based?

• A)New Keynesian economics assumes that the economy can reach equilibrium below the natural rate of unemployment, whereas new classical economics assumes that macroeconomic equilibrium is always at the natural rate of unemployment.
• B)New Keynesian economics maintains that government intervention is unnecessary, whereas classical economics supports an active government role.
• C)New Keynesian economics assumes that the long-run Phillips curve is vertical, whereas new classical economics views the long-run Phillips curve as horizontal.
• D)New Keynesian economics assumes that all prices are flexible, whereas new classical economics applies a fixed-price model.
• E)New Keynesian economics emphasizes short-run reductions in inflation rates, whereas new classical economics focuses on short-run reductions in the unemployment rate.

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Definitions:

Critical Period

Developmental window during which some event has a long-lasting influence on the brain; also, sensitive period.

Left Hemisphere

The left side of the brain, which in most people is associated with analytical tasks, language, writing, and logical reasoning.

Perception

Perception is the cognitive process by which organisms interpret and organize sensory information to represent and understand their environment.

Severe Epilepsy

A condition characterized by frequent, severe seizures that are difficult to control with medication.