New Keynesian Theory
A) specifies financial markets as the primary cause of business cycles.
B) includes microeconomic foundations and does not rely on sticky wages or prices.
C) relies on sticky wages and prices but does not include microeconomic foundations.
D) uses the same microeconomic foundations as other macro models.
E) specifies shocks to technology cause business cycles.

Question

Quizplus · Accepted Answer

New Keynesian Theory uses microeconomic foundations similar to other macroeconomic models and incorporates sticky wages and prices to explain business cycles.