Keynesian economics

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New Keynesian economics differs from real business cycle economics in that

  1. Markets are perfectly competitive in new Keynesian models

  2. Business cycles are fluctuations in the natural rate of unemployment in new Keynesian models

  3. Wages and prices are perfectly flexible

  4. Agents maximize utility in the new Keynesian model

  5. None of these Best Roger’s model of adoption curve 1995 today

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