The New Classical Model Has as Its Central Idea That

question 183

Multiple Choice

The new classical model has as its central idea that

• A)wage and price stickiness explain fluctuations in real GDP.
• B)workers and firms have rational expectations.
• C)the Federal Reserve should adopt a monetary growth rule.
• D)shifts in aggregate demand have no impact on real GDP.

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Definitions:

Recession

A period of temporary economic decline during which trade and industrial activities are reduced, typically identified by a fall in GDP in two successive quarters.

Deregulation

The process of reducing or eliminating government rules controlling how businesses can operate, often to increase market competition.

Subsidization

The act of providing financial aid or support by a government or organization to lower the cost of producing goods or services.

Monopoly

A market structure characterized by a single seller, offering a unique product or service with no close substitutes, leading to the control of a particular market.