-Refer to Exhibit 16-1.According to new classical macroeconomists,if decreases in aggregate demand are unanticipated,then the economy will move from point C to

Question

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New classical macroeconomists believe that unanticipated decreases in aggregate demand will not change the unemployment rate in the short run, as wages and prices adjust quickly to maintain equilibrium. Therefore, the economy will move to a point on the same short-run Phillips curve (SRPC), indicating no change in unemployment but a lower inflation rate, which is represented by a point below C on the same SRPC.