Refer to the information provided in Figure 32.2 below to answer the question(s) that follow. Figure 32.2
-Refer to Figure 32.2. According to ________ economists, under rational expectations an expected increase in government spending would not change AD or AS.
A) Keynesian
B) the new classical
C) monetarist
D) none of the above

Question

Refer to the information provided in Figure 32.2 below to answer the question(s) that follow.  Figure 32.2
-Refer to Figure 32.2. According to ________ economists, under rational expectations an expected increase in government spending would not change AD or AS.
A) Keynesian 
B) the new classical 
C) monetarist 
D) none of the above

Quizplus · Accepted Answer

According to the new classical economists, under rational expectations, individuals and firms will adjust their behavior to factor in the expected increase in government spending, causing no change in aggregate demand (AD) or aggregate supply (AS). Keynesian and monetarist economists may have different views on this issue.

Refer to the Information Provided in Figure 32