One Important Point on Which New Keynesian and New Classical

question 80

Multiple Choice

One important point on which new Keynesian and new classical economists are in agreement is

• A)that only unexpected changes in policy can affect output.
• B)the importance of policy credibility for determining the response of output to policy.
• C)the irrelevance of policy as output changes are the result of technology shocks.
• D)the inability of the assumption of rational expectations to explain the reactions of businesses and consumers to changes in policy.

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