The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the
A) development of the Keynesian coordination failure model.
B) the work of Milton Friedman.
C) work of John Maynard Keynes.
D) popularization of the Solow growth model.
E) rational expectation revolution.

Question

Quizplus · Accepted Answer

The rational expectation revolution, starting in the 1970s, was the most responsible for the widespread introduction of macroeconomic models built upon solid microeconomic foundations. These models assume that individuals and firms make rational decisions based on all available information, which was a departure from the traditional Keynesian approach that emphasized rigidities and imperfections in markets. This revolution also paved the way for the development of new classical and new Keynesian models that incorporate microeconomic fundamentals.

The Development Most Responsible for the Wide-Spread Introduction of Macroeconomic