- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 11. Understanding Business Cycles
- Subject 4. Theories of the Business Cycle
CFA Practice Question
The macroeconomic view that the money wage rate and the prices of goods and services are inflexible is the ______.
B. Neoclassical view
C. New Classical view
A. Keynesian view
B. Neoclassical view
C. New Classical view
Correct Answer: C
The Keynesian view holds that the money wage rate is sticky in the downward direction. The New Classical view holds that not only is the money wage rate sticky but that prices of goods and services are also sticky.
User Contributed Comments 3
| User | Comment |
|---|---|
| DannyZhou | Keynesian view: downward sticky money wage rate new classical view: downward sticky money wage rate and prices of goods and services |
| Marinov | This is the precise opposit of what the textbook says. Directly from textbook: "In contrast to the New Classical school the Neo-Keynesian school assumes slow-to-adjust (prices and wages). |
| tennis | @Marinov: that's exactly what the book says. The new classical view says that the prices are sticky. |