New Keynesians hypothesize that
A) fluctuations in output are largely caused by supply shocks.
B) the relationship between inflation and unemployment is exploitable in the long run.
C) the relationship between inflation and unemployment is exploitable in the short run.
D) there is no relationship between inflation and unemployment.
C
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Macroeconomists are able to study the entire economy by
a. ignoring much of the data available in order to reduce the number of markets that need to be studied b. studying only a few markets at a time c. simply adding up all the prices and quantities in individual markets d. aggregation which reduces the number of markets that need to be studied e. dividing total output by the number of markets
Cynthia sells walnut cookies in a perfectly competitive market where the market price is $10 per cookie. Cynthia produces 500 cookies per month with a marginal cost of $5 per cookie, an average variable cost of $3 per cookie, and an average total cost of $7 per cookie. Cynthia is likely to: a. increase the production of cookies to maximize profit
b. decrease the production of cookies but stay open. c. continue to maintain current production levels to minimize her losses. d. shut down immediately to minimize her losses.