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The Main Difference Between the New Keynesian Model and the Basic

Question 45

Multiple Choice

The main difference between the New Keynesian model and the basic monetary intertemporal model is that in the New Keynesian model,


A) the price level is sticky in the short run.
B) wages are sticky in the short run.
C) menu costs are insignificant.
D) firms are backward-looking.
E) prices adjust quickly to equate the supply and demand for goods.

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