Which of the following is the basic tenet of new classical economics?
A)A change in the fiscal policy affects the equilibrium level of real GDP but has no impact on the equilibrium price level.
B)A government-induced shift in aggregate demand affects the real GDP only if they are expected by the economic agents.
C)A change in aggregate demand affects the aggregate price level only if the aggregate supply curve is perfectly elastic.
D)A change in monetary policy affects the equilibrium level of real GDP only if those changes are unexpected.
E)An expected change in a monetary or fiscal policy leads to a proportional shift of the long run supply curve.

Question

Quizplus · Accepted Answer

New classical economics emphasizes rational expectations and suggests that only unexpected changes in monetary policy can affect real GDP, as economic agents anticipate and adjust to expected changes.

Which of the Following Is the Basic Tenet of New