Which of the following statements about modern macroeconomic theory is most accurate?
A) Keynes' ideas help us understand movements in output around its long-run trend,while the Classical model is more useful in explaining the long-run trend itself.
B) The classical model helps us understand movements in output around its long-run trend,while the short-run macro model is more useful in explaining the long-run trend itself.
C) Both classical and short-run macro models help us understand movements in output around its long-run trend,but neither model is effective at explaining the long-run trend itself.
D) Neither the classical nor the short-run macro model helps us understand movements in output around its long-run trend,but both are useful in explaining the long-run trend itself.
E) Only the short-run macro model is useful in understanding movements in output around its long-run trend,and in explaining the long-run trend itself.

Question

Quizplus · Accepted Answer

Modern macroeconomic theory incorporates both Keynesian and Classical ideas, but each is better suited to explaining different aspects of the economy. Keynes' ideas help us to understand short-run fluctuations in output around its long-run trend, while the Classical model is more useful in explaining the long-run trend itself.

Which of the Following Statements About Modern Macroeconomic Theory Is