The notion that anticipated monetary policy has no effect on the real aggregate output is commonly called the
A)Lucas critique.
B)policy ineffectiveness proposition.
C)natural rate hypothesis.
D)new Keynesian proposition.

Question

Quizplus · Accepted Answer

The policy ineffectiveness proposition suggests that anticipated changes in monetary policy will not have any real effect on aggregate output. This view is based on the assumption that individuals and firms will adjust their behavior in response to expected policy changes, thereby undermining their effectiveness. The other choices are unrelated to this proposition.

The Notion That Anticipated Monetary Policy Has No Effect on the Real