In the New Classical Model, the Natural Rate Hypothesis

Multiple Choice

In the new classical model, the natural rate hypothesis:

A) argues that the economy may not recover to its natural rate of unemployment without government intervention.
B) indicates that the government will be ineffective in reducing unemployment below its natural rate.
C) suggests that the long-run supply curve is horizontal.
D) predicts that an increase in aggregate demand will permanently lead to a lower natural rate of output.