According to the New Classical Model,government Fiscal and Monetary Policy

question 37

Multiple Choice

According to the new classical model,government fiscal and monetary policy changes are effective

• A)all of the time.
• B)only when the short-run aggregate supply curve is upward sloping.
• C)only when the policy changes affect aggregate demand.
• D)only when the policy changes are unanticipated.

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Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, free entry and exit, homogeneous products, and perfect information among consumers and producers.

Perfect Competitor

A theoretical market structure characterized by many buyers and sellers, homogeneous products, and no barriers to entry or exit, leading to perfect information and no control over prices.

Short Run

In economics, a period in which at least one input, such as plant size, cannot be changed; distinct from the long run where all inputs can be varied.

Long Run

A period in economics during which all factors of production and costs are variable, allowing for full adjustment to changes.