What are the Differences between New Keynesian economics and New classical economics as they relate to...

What are the Differences between New Keynesian economics and New classical economics as they relate to ad-as model?

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New Keynesian economics is a school of contemporary macroeconomics that provides microeconomic foundations for Keynesian economics It is developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics.

New Keynesian Economics is a modern macroeconomic school of thought that evolved from classical Keynesian economics. This is the revised theory differs from classical Keynesian thinking in terms of how quickly prices and wages adjust.

New Keynesian advocates maintain that prices and wages are "sticky," meaning they adjust more slowly to short-term economic fluctuations. This lead to explaination to such economic factors as involuntary unemployment and the impact of federal monetary policies.

New classical macroeconomics strives to provide neoclassical microeconomic foundations for macroeconomic analysis. This is in contrast with its rival new Keynesian school that uses microfoundations such as price stickiness and imperfect competition.

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Rahul Sunny answered 7 months ago

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