Which of the following models relies on emphasizing the importance of sticky wages and prices?
A) the new classical model B) the new Keynesian model
C) the real business cycle model D) the monetarist model
B
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A decrease in the price of eggs from $1.50 to $1.30 per dozen resulted in an increase in egg purchases in two cities
In Philadelphia, daily egg purchases increased from 6000 to 8000 dozens; in nearby Dover, Delaware, daily egg purchases increased from 300 to 400 dozens. The price elasticity of demand is therefore A) lower in the smaller city as would be expected. B) greater in the smaller city as would be expected. C) certainly affected by population differences in different markets. D) the same in Philadelphia as in Dover.
Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ________
A) inelastic B) unit elastic C) perfectly elastic D) elastic