New Keynesian economics refers to
A)the IS-LM model.
B)models of real business cycles with sticky prices.
C)models that do not support a role for fiscal or monetary policy.
D)the monetarist approach.
E)the work of Milton Friedman.

Question

Quizplus · Accepted Answer

New Keynesian economics is characterized by models that incorporate nominal rigidities or "sticky prices." These models suggest that there may be a role for monetary policy in stabilizing the economy, even in the long run. The IS-LM model is more closely associated with traditional Keynesian economics, while models of real business cycles with sticky prices are a distinct branch of macroeconomic theory. Neither choice C, D, nor E accurately represents the core tenets of New Keynesian economics.

New Keynesian Economics Refers to