The difference between new classical theory and new Keynesian theory is that
A) in new classical theory wages are assumed to be flexible, and in new Keynesian theory wages are assumed to be somewhat inflexible.
B) in new classical theory wages are assumed to be somewhat inflexible, and in new Keynesian theory wages are assumed to be flexible.
C) adaptive expectations is the dominant expectations theory in new classical theory, and rational expectations is the dominant expectations theory in new Keynesian theory.
D) in new Keynesian theory the short-run aggregate supply curve is vertical, and in new classical theory the short-run aggregate supply curve is upward sloping.
A
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The time gap between a nation's decision to implement a corrective economic policy and the actual results of the policy is known as the:
A) inside lag. B) inside lapse. C) outside lag. D) outside lapse.
Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the
A) forgone work. B) forgone party. C) forgone working and partying. D) forgone working or partying, depending on which was your next best choice. E) test because you are taking it.