The new classical model has as its central idea that
A) workers and firms have rational expectations.
B) wage and price stickiness explain fluctuations in real GDP.
C) shifts in aggregate demand have no impact on real GDP.
D) the Federal Reserve should adopt a monetary growth rule.
A
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Which of the following explains why purchasing power parity may not hold perfectly in the long run?
A) Most countries have free markets with limited government regulation. B) Consumer preferences for goods and services across countries are very similar. C) Most countries do not impost trade barriers. D) Some goods and services produced in any country are not traded internationally.
When we drive a car we own, we incur not only a private cost, but also a(n) ________ cost.
Fill in the blank(s) with the appropriate word(s).
The idea that the economy will solve its own problems and not need any stimulus measures falls under the _________ framework.
a. short-run b. medium-run c. intermediate d. long-run
Which of the following is most likely an example of diseconomies of scale?
A. Alpha-Beta Inc. raised its price by 10 percent after a 5 percent increase in production costs. B. The XYZ Co. increased production capacity by 25 percent and experienced a 30 percent increase in its total cost. C. Widget Manufacturing doubled its production by opening a new plant that was identical to its old plant. D. The per-unit costs on Excel Publishing Company's manuals fell after it received a large order from the government.