Which of the following assumptions is found in Friedman's model but not in the new classical model?
A)Supply of labor depends on expected real wage.
B)Workers gradually adapt their expectations of the price level to the actual price level.
C)imperfect information
D)market-clearing labor market

Question

Quizplus · Accepted Answer

Friedman's model incorporates the idea that workers gradually adapt their expectations of the price level to the actual price level, a concept known as adaptive expectations. This contrasts with the new classical model, which typically assumes rational expectations, where individuals instantly adjust their expectations to reflect all available information.

Which of the Following Assumptions Is Found in Friedman's Model