According to new classical economists,when monetary and fiscal policies are __________ anticipated,people form their expectations __________,and wages and prices are __________,the policy ineffectiveness proposition (PIP)results.

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New classical economists argue that when monetary and fiscal policies are correctly anticipated, people form their expectations rationally, and if wages and prices are flexible, the policy ineffectiveness proposition (PIP) results. This means that anticipated policy changes will have no real effects on output or employment because individuals adjust their behavior in anticipation of these changes.

According to New Classical Economists,when Monetary and Fiscal Policies Are