The New Classical Macroeconomists Conclude That

question 43

Multiple Choice

The new classical macroeconomists conclude that

• A) monetary and fiscal stabilization policies are most effective at countering supply-side shocks.
• B) the short-run aggregate supply curve is unaffected by expected changes in the price level.
• C) if firms and individuals formulate expectations rationally, they will frustrate activist government stabilization policy.
• D) real output will increase as long as wage increases exceed price increases, thus stimulating aggregate demand.
• E) firms and individuals can be counted on to make systematic errors in forecasting the future.

Analyze the progressive, regressive, and proportional nature of various taxes and their impact on different income groups.

Comprehend the concept of tax incidence and how the burden of a tax is distributed between consumers and producers.

Understand the concepts of elasticity of labor supply and demand and their relationship to the burden of payroll taxes.

Recognize the long-term effects of changes in individual income tax rates and corporate profits tax on prices and profits across sectors.

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