Which business cycle theory emphasizes that, because of previously negotiated wage agreements, both expected and unexpected fluctuations in aggregate demand can change real GDP?
A)the new classical cycle theory
B)the new Keynesian cycle theory
C)the monetarist cycle theory
D)the Keynesian cycle theory
E)the real business cycle theory

Question

Quizplus · Accepted Answer

The new Keynesian cycle theory emphasizes that wage and price stickiness, due to previously negotiated wage agreements, can cause both expected and unexpected changes in aggregate demand to affect real GDP.

Which Business Cycle Theory Emphasizes That, Because of Previously Negotiated