New Keynesian inflation dynamics can account for sluggish responses of

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Quizplus · Accepted Answer

New Keynesian inflation dynamics focus on the response of inflation to variations in aggregate demand, including factors such as sticky prices and wages, and imperfect competition in the labor or product markets. It does not directly address fluctuations in real GDP or variations in aggregate supply, so choices A and B are incorrect. While changes in aggregate supply can have an impact on inflation, the focus of New Keynesian models is on demand-side factors, so choice C is also incorrect.

New Keynesian Inflation Dynamics Can Account for Sluggish Responses of