According to the new classical macroeconomists,each of the following statements is true EXCEPT:
A)Disinflation will be harder to bring about because of the time-inconsistency problem.
B)Policymakers are tempted to deviate from the preannounced policy once the public changes its expectations.
C)Feedback rules are preferred to discretionary rules.
D)Disinflation will be painless if the restrictive policies announced by the government are credible.

Question

Quizplus · Accepted Answer

New classical macroeconomists do not prefer feedback rules over discretionary rules. In fact, they argue that discretionary policies can cause more harm than good because of time-inconsistency problems and the difficulty in correctly anticipating the reactions of economic agents. Instead, they advocate for clear and credible pre-announced policies.

According to the New Classical Macroeconomists,each of the Following Statements