The economic view that retains the assumption of rational expectations but drops the assumption of completely flexible prices and wages is called
A) new Keynesian economics.
B) supply-side economics.
C) monetarism.
D) real business-cycle economics

Question

Quizplus · Accepted Answer

The economic view that retains the assumption of rational expectations but drops the assumption of completely flexible prices and wages is called new Keynesian economics. In this view, prices and wages are sticky in the short run, leading to market inefficiencies and potential for government intervention to stabilize the economy.

The Economic View That Retains the Assumption of Rational Expectations