Exam 11: New Classical Economics

Keynesians disagree with the new classical model because

The more limited information,the _____ the new classical AS curve.

Which of the following statements about the history of inflation in the U.S.is true?

In an economy with higher and more variable inflation,the new classical model would predict that the short run aggregate supply curve would

Explain the new classical theory explanation of the Great Depression.What is the Keynesian critique of this explanation?

Suppose that the Federal Reserve makes an announcement that it is going to permanently reduce the inflation rate to zero.Will inflation expectations immediately adjust? What will determine the extent to which they adjust?

Explain the new classical proposition of "policy ineffectiveness".

New classical economists like Robert Lucas argue that the Great Depression was primarily caused by

The theory of rational expectations states that

New classical economists

If policy irrelevance holds in the new classical model,does that mean that monetary and fiscal policy can never impact output? Under what conditions could it impact output? Explain.

In the new classical view,an anticipated decrease in government spending would be expected to

Like the monetarists,new classical economists favor

In the rational expectations model

According to the new classical view,if the money supply and prices fall but output remains the same indicates that

In the new classical model,an unanticipated increase in the money stock would cause

Monetarists and Keynesians agree that expectations are

If government policy makers become more secretive,then the short run aggregate supply curve should get

According to which of the following models are economic agents assumed to have perfect information?

One similarity between the policy recommendations of the new classical and monetarist models is that