Which of the following is NOT an assumption of new Keynesian economics?
A) Wage and prices are inflexible downward.
B) In the long run an economy may operate at less than full employment.
C) Individual decision makers act to maximize the interests of all of society.
D) Firms set prices based on maximizing their own profits.

Question

Quizplus · Accepted Answer

New Keynesian economics does not assume that individual decision makers act to maximize the interests of all of society. Instead, it typically assumes that individuals and firms act in their own self-interest, such as firms setting prices to maximize profits.

Which of the Following Is NOT an Assumption of New