According to the new classical model, ________.
A) unanticipated policy has no effect
B) only anticipated policy can influence the business cycle
C) anticipated policy has no effect on the business cycle
D) A and B only

Question

Quizplus · Accepted Answer

The new classical model posits that only unanticipated policy can influence the business cycle, meaning anticipated policy (one that economic agents can foresee and adjust their behavior accordingly) has no effect on the business cycle.

According to the New Classical Model, ________