New Keynesian economists critique rational expectations by arguing that short-term wage stickiness is brought about by a. the po

Question

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New Keynesian economists critique rational expectations by arguing that short-term wage stickiness is brought about by a. the po

licy ineffectiveness proposition. b. imperfect information and efficiency wages. c. competitive markets and inflation. d. competitive markets and market-clearing wages.

Business

1 answer:

mylen [45] · Answer 1 · 2022-09-10T11:33:02+03:00

Answer:

New Keynesian economists critique rational expectations by arguing that short-term wage stickiness is brought about by

b. imperfect information and efficiency wages.

Explanation:

The assumption in macroeconomic theories is that economic agents, households, and companies exercise rational expectations. The New Keynesian economics posits that rational expectations have become distorted as a result of market failure, arising from asymmetric information and imperfect competition, thus questioning the ability of markets to self-regulate and self-correct.