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

Question

Quizplus · Accepted Answer

The new classical model assumes that people form their expectations about the future in a rational manner, taking into account all available information, including about aggregate demand. This contrasts with assumptions of wage or price rigidity or non-competitive markets.

One Assumption of the New Classical Model Is That