One assumption of the new classical model is that
A)money wage rates are rigid.
B)people make rational expectations about aggregate demand.
C)markets are not purely competitive.
D)prices are "sticky" upward.

Question

Quizplus · Accepted Answer

The new classical model assumes that people make rational expectations, meaning they use all available information to forecast future economic variables, including aggregate demand.

One Assumption of the New Classical Model Is That