Critics of the New Classical Macroeconomics Argue That

question 13

Multiple Choice

Critics of the new classical macroeconomics argue that

• A) the necessary information for firms to formulate rational expectations is not generally available.
• B) deviations from the natural rate of unemployment are too small and transitory to have resulted from purely unexpected events.
• C) the theory neglects the slow and adaptive manner in which wages and prices adjust, thus extending the duration of a business cycle.
• D) markets clear too rapidly and continuously for individuals and firms to plan effectively.
• E) the natural rate of unemployment stated in the assumptions of the new classical macroeconomic theory is too high to be of much use to policy makers.

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Definitions:

Estimated Useful Life

The expected period over which an asset is estimated to be usable, impacting its depreciation calculation.

Depreciated

The process of allocating the cost of a tangible asset over its useful life, reflecting its decrease in value over time.

Remaining Cost

The costs that have not yet been incurred or allocated in the production of goods and services, often considered in future budgeting or cost analysis.

Accounting Estimate

An approximation of a financial statement element, item, or account in the absence of exact data, often involving judgment or assumptions.