New classical economists
A) stress the importance of federal budget deﬁcits in stimulating aggregate demand.
B) hold that, left alone, the economy gravitates to its full-employment level of output.
C) emphasize tax cuts as means of increasing aggregate supply.
D) advocate active use of monetary policy to stabilize the economy.

Question

Quizplus · Accepted Answer

New classical economists hold that, left alone, the economy gravitates to its full-employment level of output. They believe that markets are self-correcting and will eventually adjust to any shocks or disturbances in the economy, leading to a return to full employment. They do not see a need for government intervention to stimulate demand during recessions, as this can lead to inflationary pressures in the long run.

New Classical Economists