According to the New Classical Theory, Economic Policies Are Effective

question 276

Multiple Choice

According to the new classical theory, economic policies are effective

• A) only if they are unanticipated.
• B) only if they are anticipated.
• C) only if they are formed with rational expectations.
• D) only if they are expansionary in nature.

---

Definitions:

Perfect Rationality

The assumption or condition under which individuals make decisions that are entirely logical and optimize their self-interest.

Turnover

The rate at which employees leave a company and are replaced by new employees, affecting the company's performance and morale.

Decision-Making Error

Mistakes or flaws in the process of choosing between alternatives that can lead to suboptimal or harmful outcomes.

Salaries

Regular payments made to employees for their labor, typically expressed as an annual sum and paid in monthly or biweekly intervals.