One Strategy Consistent with the New Classical Macroeconomists' Theories Would

question 9

Multiple Choice

One strategy consistent with the new classical macroeconomists' theories would have

• A) fiscal policy focus on maintaining full employment regardless of the size of the resulting budget deficit.
• B) monetary policy stick to an announced policy to keep the rate of inflation to some specified low figure.
• C) the government emphasize policies of wage and price controls to achieve a targeted full-employment rate with stable prices.
• D) monetary authorities impose a structure of variable tax rates that automatically adjusts to changes in the unemployment rate.
• E) both fiscal and monetary policy coordinated in a way that ensures that both the Phillips curve and long-run aggregate supply curves are vertical.

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Definitions:

Causal Effects

The impact of one variable on another variable, determining how changes in one lead to changes in the other.

Policy

A course or principle of action adopted or proposed by an organization or individual, often to guide decisions and achieve rational outcomes.

Causal Relationship

A connection between two variables where a change in one directly causes a change in the other.

Pickup Truck

A light motor vehicle with an open-top rear cargo area (bed), typically used for transporting goods.