The "new classical" economics took advantage of the disarray and partial eclipse of Keynesian economics to reestablish macro model-building based on the assumption of price ________ and market ________.
A)flexibility,clearing
B)flexibility,non-clearing
C)stickiness,clearing
D)stickiness,non-clearing

Question

Quizplus · Accepted Answer

The "new classical" economics assumes that prices and wages are flexible and markets clear quickly, meaning that supply and demand always come into equilibrium. This contrasts with Keynesian economics, which assumes that prices and wages can be sticky in the short run, leading to market inefficiencies and the potential need for government intervention. Choice A correctly reflects the assumptions of the "new classical" economics.

The "New Classical" Economics Took Advantage of the Disarray and Partial