Both the new Keynesians and traditional Keynesians would disagree with which of the following ideas?
A) Prices and wages tend to adjust slowly in the short run.
B) Real GDP adjusts to changes in aggregate demand.
C) Discretionary monetary and fiscal policies are necessary to keep the economy stabilized.
D) Changes in business and consumer spending represent a substantial source of economic instability.
E) Markets clear continuously.

Question

Quizplus · Accepted Answer

Both the new Keynesians and traditional Keynesians believe in market failures and the need for government intervention to stabilize the economy. Therefore, they would not agree with the idea that markets clear continuously (E). Choices A, B, C, and D are all ideas that both new and traditional Keynesians would generally agree with.

Both the New Keynesians and Traditional Keynesians Would Disagree with Which