The neoclassical models of macroeconomics
A) replace the flexible price assumption with an assumption of automatic price adjustments.
B) keep the flexible price assumption but incorporate informational difficulties into the representation of their adjustment.
C) keep the flexible price assumption but incorporate a measure of price inertia exerted from the foreign sector.
D) keep the flexible price assumption but modify the model of the money market to incorporate disequilibrium dynamics.
E) none of the above.

Question

Quizplus · Accepted Answer

Neoclassical models of macroeconomics maintain the flexible price assumption but incorporate informational difficulties into the representation of their adjustment, acknowledging that prices do not adjust instantly due to imperfect information among other factors.

The Neoclassical Models of Macroeconomics