A primary conclusion of new classical economics is:
A) wages and prices are inflexible downward.
B) there is no short run tradeoff between unemployment and inflation.
C) a free market economy can operate at less than full employment for long periods of time.
D) government intervention in the economy will be rendered ineffective by the responses of businesses and households to these policies.

Question

Quizplus · Accepted Answer

New classical economics suggests that government intervention is ineffective because businesses and households adjust their expectations and behaviors in response to policy changes, neutralizing their intended effects.

A Primary Conclusion of New Classical Economics Is