Question: What is the primary difference between the Real Business Cycle (RBC) Model and the New Keynesian (NK) Model? RBC describes only the long run while

  1. What is the primary difference between the Real Business Cycle (RBC) Model and the New Keynesian (NK) Model?

RBC describes only the long run while NK describes both the short run and the long run.

NK describes only the long run while RBC describes both the short run and the long run.

Nothing;both models describe the same set of outcomes with different methods.

NK describes only the short run while RBC describes only the long run.

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