________ policies do not change aggregate real output or the unemployment in the ________ model.
A) Anticipated; new Keynesian
B) Unanticipated; new Keynesian
C) Anticipated; new classical
D) Unanticipated; new classical

Question

Quizplus · Accepted Answer

Anticipated policies are already factored in by rational agents in the new classical model, therefore they do not affect aggregate output or unemployment. This is in contrast to the new Keynesian model where anticipated policies can have an impact through their effects on expectations and price/wage setting behavior.

________ Policies Do Not Change Aggregate Real Output or the Unemployment