Research supporting the new Keynesian model finds that prices are ________.
A)slow to adjust to aggregate demand shocks
B)changed very frequently
C)changed only infrequently
D)not as flexible as wages

Question

Quizplus · Accepted Answer

The new Keynesian model argues that prices are slow to adjust to changes in aggregate demand, and that this sluggishness in adjusting prices leads to short-term fluctuations in output and employment.

Research Supporting the New Keynesian Model Finds That Prices Are