New Keynesian and new classical economists agree that
A)policymakers cannot permanently maintain the unemployment rate below the natural rate.
B)production beyond the full-employment level of output is impossible, even in the short run.
C)in the long run the inflation rate must be zero.
D)the LRAS curve slopes up.

Question

Quizplus · Accepted Answer

Both new Keynesian and new classical economists agree that in the long run, the economy will eventually return to its natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU). Policymakers may be able to temporarily reduce unemployment below this level through expansionary monetary or fiscal policy, but in the long run, the economy will adjust and unemployment will return to the NAIRU.

New Keynesian and New Classical Economists Agree That