Which of the following are TRUE?
I. New Keynesian economists believe that money wage rates are influenced by rational expectatio the price level.
II. New classical economists believe that money wage rates are influenced by rational expectations price level.
III. New classical economists believe expected changes in aggregate demand trigger business cycles
A) II and III
B) I, II and III
C) I and III
D) I and II

Question

Quizplus · Accepted Answer

New Keynesian economists believe that money wage rates are influenced by rational expectations, but they do not specifically mention the price level. New classical economists believe that money wage rates are influenced by rational expectations of the price level. They also believe that changes in aggregate demand are a result of technological progress and changes in preferences, rather than being the cause of business cycles. Therefore, statement III is false.

Which of the Following Are TRUE