If we compare the models of Lucas and Mankiw we realize that
A)Mankiw does not assume that people have rational expectations
B)Lucas assumes firms are price setters while Mankiw assumes that firms are price takers
C)Lucas assumes that prices are sticky because firms are reluctant to change them
D)both models permit a demand-based explanation of the business cycle
E)none of the above

Question

Quizplus · Accepted Answer

Both Lucas and Mankiw models allow for demand-based explanations of the business cycle, incorporating different mechanisms and assumptions about market behavior and expectations.

If We Compare the Models of Lucas and Mankiw We