The New Classical School Holds That

Multiple Choice

The new classical school holds that:

A) macroeconomic equilibrium is achieved only through active government intervention.
B) unemployment is only temporary, because the economy tends naturally toward equilibrium.
C) rigid prices and wages prevent the economy from achieving equilibrium.
D) macroeconomic equilibrium cannot occur as long as the aggregate supply curve is vertical.
E) rational expectations result in involuntary unemployment and prolonged periods of macroeconomic disequilibrium.