Which of the Following About New Classical Macroeconomics Is FALSE

question 33

Multiple Choice

Which of the following about new classical macroeconomics is FALSE?

• A)It returned to the classical view that shifts in the aggregate demand curve affect only the aggregate price level, not aggregate output.
• B)It challenged traditional arguments about the slope of the short-run aggregate supply curve based on the concept of rational expectations.
• C)It suggested that changes in productivity cause economic fluctuations.
• D)It embraced the Keynesian notion that changes in aggregate demand may affect aggregate output in the short run.

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Definitions:

Monetary Policy

The policy laid down by the central bank or monetary authority of a country, focusing on controlling the money supply and interest rates to achieve economic objectives.

Government Policy

Strategies and actions taken by a government to manage public resources and regulate national affairs.

Friedman And Phelps

Economists Milton Friedman and Edmund Phelps, known for their work on the natural rate of unemployment and the expectations-augmented Phillips curve.

Natural Rate

The long-term equilibrium rate of unemployment or economic output, unaffected by short-term fluctuations.