The new Keynesians emphasize the importance of
A)rational expectations.
B)the monetary growth rule.
C)real causes of the business cycle.
D)sticky wages and prices.

Question

Quizplus · Accepted Answer

The new Keynesians emphasize the importance of sticky wages and prices, which lead to macroeconomic fluctuations. They argue that prices and wages do not adjust quickly enough to changes in supply and demand, leading to periods of unemployment and inflation. This is in contrast to the classical view, which assumes that prices and wages are flexible and adjust quickly to changes in the economy. Rational expectations, the monetary growth rule, and real causes of the business cycle are all relevant to macroeconomic theory, but they are not unique features of the new Keynesian approach.

The New Keynesians Emphasize the Importance of