While Much of New Classical Macroeconomics Is Being Refuted by the Evidence

question 116

Multiple Choice

While much of New Classical macroeconomics is being refuted by the evidence, at least one part of it may be a permanent legacy to all economists. It is the insistence on a certain aspect of macroeconomic policy:

• A) it has as much impact on SAS as on AD.
• B) it has its impact on nominal and not real variables.
• C) people will try to anticipate it and then act accordingly.
• D) it has no impact on SAS or AD, but does affect LAS.

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Definitions:

Weighted Average Model

A calculation that assigns different weights to different items or data points according to their importance in achieving a more accurate average.

Forecasts

Predictions or estimates of future events or trends, based on analysis of available data and indicators.

Mean Absolute Deviation

A statistical metric that measures the average distance between each data point and the mean of a data set, demonstrating variability.

Weighted Average Model

A calculation model that assigns varying degrees of importance or weights to different data points or variables when computing an average.