Question

According to the new Keynesian theory, the widespread importance of small menu costs results in variations in aggregate demand causing both

A) greater short-run adjustments in real GDP and delayed adjustment in the price level.

B) greater short-run adjustments in the real GDP and immediate adjustment in the price level.

C) smaller short-run adjustments in real GDP and delayed adjustment in the price level.

D) smaller short-run adjustments in real GDP and immediate adjustment in the price level.

Answer

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