Which of the following models has as its central idea that workers and firms have rational expectations?
A) Monetarist model
B) New classical model
C) Real business cycle model
D) New Keynesian model

Question

Quizplus · Accepted Answer

The New Classical model is based on the idea that individuals, including workers and firms, have rational expectations and make decisions based on their understanding of the economy. This differs from the Monetarist and Real Business Cycle models, which focus more on the role of money and technology respectively, and the New Keynesian model, which emphasizes the role of imperfect information and market failures.

Which of the Following Models Has as Its Central Idea