Which business cycle theory emphasizes that, because of long- term wage agreements, both expected and unexpected fluctuations in aggregate demand can change real GDP?
A) Keynesian cycle theory
B) the new Keynesian cycle theory
C) monetarist cycle theory
D) the new classical cycle theory

Question

Quizplus · Accepted Answer

The new Keynesian cycle theory emphasizes the role of sticky wages and prices, which are often due to long-term wage agreements. This stickiness means that both expected and unexpected changes in aggregate demand can affect real GDP.

Which Business Cycle Theory Emphasizes That, Because of Long- Term