Which of the following groups believes that the private sector takes actions based on rational expectations to offset policy actions?
A)Keynesians.
B)New classical economists.
C)Supply-siders.

Question

Quizplus · Accepted Answer

New classical economists believe in the concept of rational expectations, which means that individuals and businesses will adjust their behavior based on changes in policy, such as changes in tax rates or monetary policy, in a way that offsets the effects of the policy itself. This belief in rational expectations leads to the conclusion that government interventions, such as fiscal policy, are ineffective in stimulating the economy. Keynesians, on the other hand, believe that government intervention is necessary to correct market failures and stabilize the economy, while supply-siders focus on the supply side of the economy, particularly tax policy and incentives for businesses to invest and expand.

Which of the Following Groups Believes That the Private Sector