In the New Classical View

question 89

Multiple Choice

In the new classical view,

• A) a change in the money supply will affect real GDP only if people anticipate the policy change.
• B) monetary policy can never change real GDP.
• C) using monetary policy will change real GDP only if the policy takes people by surprise.
• D) fiscal policy has more chance of success than monetary policy.

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Definitions:

Spending Variance

A measure indicating the disparity between what was anticipated to be spent and what was actually expended in financial terms.

Employee Salaries

The monetary compensation paid to employees for their labor, typically on a monthly or yearly basis.

Net Operating Income

The total profit of a company after operating expenses are subtracted from gross profit, but before income taxes and interest are deducted.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity levels, allowing for more accurate budgeting in variable cost areas.