The regarding the new classical macroeconomics is hoe realistic is the assumption ?
Correct answer: D. of rational expectations.
- A. that monetary policy affects aggregates demand
- B. that markets do not clear quickly
- C. that fiscal policy affects aggregate demand
- D. of rational expectations.
Explanation
New classical macroeconomics relies heavily on rational expectations, meaning people use available information when forecasting economic variables. The realism of this assumption is a major point of debate.
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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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