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According to the New Keynesian Theory, the Widespread Importance of Small

Question 301

Multiple Choice

According to the new Keynesian theory, the widespread importance of small menu costs results in variations in aggregate demand causing both


A) greater short-run adjustments in real GDP and delayed adjustment in the price level.
B) greater short-run adjustments in the real GDP and immediate adjustment in the price level.
C) smaller short-run adjustments in real GDP and delayed adjustment in the price level.
D) smaller short-run adjustments in real GDP and immediate adjustment in the price level.

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