New Classical Economists Build Their Theories Upon

question 32

Multiple Choice

New classical economists build their theories upon

• A) adaptive expectations.
• B) inflexible wages and prices.
• C) rational expectations.
• D) the assumption that it takes a long time for markets to achieve equilibrium values.

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Definitions:

Aggregate Demand

Whole demand for merchandise and services in an economy, at a particular overall price point within a defined temporal scope.

Money Supply

The sum of all financial assets in an economy at a particular time, encompassing cash, deposits in banks, and other easily convertible assets.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of all final goods and services produced within a country's borders in a given year, reflecting the real quantity of production.

Expansionary Monetary Policy

A policy by the central bank to increase money supply and encourage economic growth, typically through lowering interest rates.