The Great Recession was dated by the National Bureau of Research as having begun at the end of 2007. Real GDP fell for five of the next six quarters in 2008 and 2009 and rose from the third quarter of 2009 to the second quarter of 2010. The GDP Price Index rose in every quarter between the first quarter of 2008 and the second quarter of 2010, except for the fourth quarters of 2008 and 2009. Finally, the unemployment rate increased in every month but three between January of 2008 and October, November, and December of 2008, when it reached a peak of 10 percent. It then fell and remained at around 9.6 percent through the second quarter of 2010.

Do these numbers tend to support the rational expectations hypothesis or the New Keynesian model? Why or why not?

Miller, R. L.. (2021).Economics Today: The Macro View, 20^thedition. Pearson: Upper Saddle River, NJ.