________ policies do not change aggregate real output or the unemployment rate in the ________ model.
A)Anticipated; new Keynesian
B)Unanticipated; new Keynesian
C)Anticipated; new classical
D)Unanticipated; new classical

Question

Quizplus · Accepted Answer

Anticipated policies have no effect in new classical models, as agents are able to adjust their expectations and respond to policy changes accordingly. The new Keynesian model, on the other hand, allows for price and wage rigidities that can create short-run output and unemployment effects from anticipated policies.

________ Policies Do Not Change Aggregate Real Output or the Unemployment