A group of modern economists who believe that markets clear very rapidly and that expanding the money supply will always increase prices rather than employment are the ?
Correct answer: D. new classical school
- A. Keynesians
- B. post-keynesians
- C. monetarists
- D. new classical school
Explanation
New classical economists assume rapidly clearing markets and rational expectations, so anticipated monetary expansion changes prices rather than real employment or output. This distinguishes them from Keynesian models with wage and price rigidities.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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