Multiple Choice
New classical economics contends that policy activism is
A) not warranted, because we don't know enough about the workings of the economy to stabilize it.
B) not warranted; the public defeats discretionary policies because everyone expects them, and therefore, their effectiveness is thwarted.
C) warranted, because discretionary policies have a strong effect on real output.
D) warranted, because expectations are rational only in the short run.
Correct Answer:
Verified
Correct Answer:
Verified
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