In the new classical model,the aggregate supply schedule depends on
A)the expected level of the money stock.
B)the expected price level.
C)the expected values of fiscal policy variables and other possible determinants of aggregate demand.
D)Both a and c
E)All of the above

Question

Quizplus · Accepted Answer

In the new classical model, the aggregate supply schedule depends on the expected price level. This is because producers adjust their output according to the expected price level, as they want to ensure that they are making a profit. The expected level of the money stock and the expected values of fiscal policy variables may affect aggregate demand, but they do not directly determine the aggregate supply schedule in the new classical model.

In the New Classical Model,the Aggregate Supply Schedule Depends on