A basic assumption of the new classical macroeconomists is that
A) fluctuations in aggregate demand are impossible in the short run.
B) MQ is identical to real GDP.
C) output is inversely related to the tax rate.
D) markets work efficiently.
E) most unemployment is involuntary.

Question

Quizplus · Accepted Answer

New classical macroeconomists believe that markets work efficiently, meaning that prices and wages adjust quickly to changes in supply and demand. This assumption is at the core of their macroeconomic models and influences their policy prescriptions.

A Basic Assumption of the New Classical Macroeconomists Is That