A Central Concept of New Keynesian Macroeconomics Is That in Setting

question 135

Multiple Choice

A central concept of New Keynesian macroeconomics is that in setting prices and wages,self-interested firms and workers are acting

• A)irrationally,since their self-interest is badly damaged by the ensuing business cycles.
• B)irrationally,since this imposes business cycles on everyone not part of their arrangements.
• C)rationally,since they do not bear a fully offsetting cost of business cycles.
• D)rationally,since the total welfare loss of business cycles must be small enough to justify the price and wage setting.

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Definitions:

Grant Date

In the context of stock options, the grant date is the date on which an employee is given the right to exercise their options at a set price.

Common Stock

represents units of ownership in a corporation, giving shareholders voting rights and a share in the company’s profits through dividends.

Market Value

The current quoted price at which an asset or service can be bought or sold in a marketplace.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of shareholders.