With the assumption that some voluntary exchanges that would make both parties better off are somehow being blocked,we have the basis for a ________ macroeconomic model,such as those constructed by ________ economists.
A)non-market-clearing,New Keynesian
B)non-market-clearing,New Classical
C)market-clearing,New Keynesian
D)market-clearing,New Classical

Question

Quizplus · Accepted Answer

The statement implies that some markets are not clearing, which means that there is a shortfall in demand or supply that is preventing some mutually beneficial trades. This assumption is the basis of non-market-clearing models, which include New Keynesian and New Classical approaches. The New Keynesian model emphasizes the role of sticky prices, monopolistic competition, and imperfect information in generating market failures, while the New Classical model stresses the importance of rational expectations, flexible prices, and complete markets in ensuring market efficiency. Therefore, Option A is the most suitable answer.

With the Assumption That Some Voluntary Exchanges That Would Make