Exhibit 16-1

-Refer to Exhibit 16-1.According to new classical macroeconomists,if increases in aggregate demand are correctly anticipated,then the economy will move from point A to

Question

Exhibit 16-1
 
-Refer to Exhibit 16-1.According to new classical macroeconomists,if increases in aggregate demand are correctly anticipated,then the economy will move from point A to

Quizplus · Accepted Answer

According to the new classical macroeconomic theory, if increases in aggregate demand are correctly anticipated, there will be no effect on the equilibrium level of output and employment. Therefore, the economy will stay at point A, and there will be no movement to any other point on the graph. Consequently, none of the other options are valid.

Exhibit 16-1 -Refer to Exhibit 16-1.According to New Classical Macroeconomists,if Increases in Classical