New classical economics
A) differs from classical economics in that the latter focuses on the determination of long-run aggregate supply while the former focus on the determination of short-run aggregate supply.
B) is similar to classical economics in that both theories incorporate expectations in their analysis of the economy in the long-run.
C) differs from classical economics in that the latter focuses on producers' expectations only while the latter also includes consumers' expectations in the determination of long-run macroeconomic equilibrium.
D) is similar to classical economics in that both theories focus on the determination of long-run aggregate supply and the economy's ability to reach this level of output quickly.

Question

Quizplus · Accepted Answer

New classical economics is similar to classical economics in that both theories focus on the determination of long-run aggregate supply and the economy's ability to reach this level of output quickly. New classical economics emphasizes the importance of price flexibility and market clearing in achieving long-run equilibrium, while classical economics focused on the determinants of long-run growth and productivity. New classical economics also incorporates rational expectations, which assumes that individuals have all relevant information and form unbiased predictions about future events.

New Classical Economics