If We Compare the Frictionless Neoclassical Theory with the Rational

question 16

Multiple Choice

If we compare the frictionless neoclassical theory with the rational expectations approach, we can conclude that in both cases

• A)wages and prices are assumed to be rigid
• B)there is little or no room for stabilization policy since markets are assumed to clear rapidly
• C)the AS-curve is upward sloping in the short run but vertical in the long run
• D)the effects of fiscal policy on output are permanent
• E)all of the above

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Definitions:

Standard Deviations

A statistic that measures the dispersion or spread of a set of data points relative to their mean.

Mean

The average of a set of numerical values, calculated by summing them up and dividing by the number of values.

Deviation

In statistics, it refers to the difference between the observed value and the mean of a dataset, indicating how much the data points diverge from the average.

Skewness

A measure of the asymmetry of the probability distribution of a real-valued random variable.