According to the new classical model,
A)unanticipated policy has no effect on the business cycle.
B)only anticipated policy can influence the business cycle.
C)anticipated policy has no effect on the business cycle.
D)unanticipated policy may or may not have an effect on the business cycle.

Question

Quizplus · Accepted Answer

In the new classical model, anticipated policy changes are already factored into people's expectations and thus have no effect on the business cycle. Unanticipated policy changes can affect the business cycle because they are not expected and can lead to adjustments in behavior.

According to the New Classical Model