The most important new Keynesian assumption that distinguishes this theory from the real-business-cycle theory is the new Keynesian assumption
A. of price flexibility.
B. of a horizontal short-run aggregate curve.
C. of a horizontal aggregate demand curve.
D. about the importance of interest rates in determining investment spending.
Answer: B
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Indifference curves are convex to the origin because of:
A) transitivity of consumer preferences. B) the assumption of a diminishing marginal rate of substitution. C) the assumption that more is preferred to less. D) the assumption of completeness. E) none of the above
Patents, copyrights, and trademarks
a. are examples of government-created monopolies. b. allow their owners to reduce the costs of what they produce. c. generate more revenue for the government than they cost consumers in the form of higher prices. d. All of the above are correct.
Which of the following has been a century-long trend in the United States?
A. Decline of total value of world trade. B. Relative decline in service sector to manufacturing. C. Relative decline in manufacturing to the service sector. D. Relative increase in farming to manufacturing.
Sunk costs:
A. should be considered only when there is no information about marginal cost and marginal benefit. B. should be considered, but only when marginal cost is less than marginal benefit. C. are an essential part of economic decision making. D. are irrelevant to economic decision making.