Multiple Choice
Which of the following accurately describes the new classical view of stabilization policy?
A) Changes in monetary policy do not affect output in the short run.
B) Policy changes which are unexpected are likely to introduce substantial uncertainty in household and business decisionmaking, causing output to become more volatile.
C) There's no need for stabilization policy since the economy operates at its full-employment level in the short run.
D) Rational expectations negates any effect of stabilization policy.
Correct Answer:
Verified
Correct Answer:
Verified
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