Credibility of an inflation reduction policy does NOT matter in which of the following models?
A) standard Keynesian
B) new classical
C) new Keynesian
D) all of the above

Question

Quizplus · Accepted Answer

In the standard Keynesian model, the credibility of an inflation reduction policy is not a central concern because this model emphasizes the role of aggregate demand in determining economic outcomes, rather than expectations or credibility issues. The new classical and new Keynesian models, however, incorporate expectations more fundamentally, making the credibility of policy actions important for their effectiveness.

Credibility of an Inflation Reduction Policy Does NOT Matter in Which