According to the new classical model,the impact of an anticipated expansionary monetary policy will be
A)to increase the price level in the long run.
B)to increase the real national income in the long run.
C)to decrease the natural rate of unemployment.
D)to decrease the price level and the unemployment rate.

Question

Quizplus · Accepted Answer

According to the new classical model, the economy's long-run aggregate supply curve is vertical, meaning that changes in the money supply only affect nominal variables such as the price level, but not real variables such as national income or unemployment rate. Therefore, an anticipated expansionary monetary policy will only increase the price level in the long run.

According to the New Classical Model,the Impact of an Anticipated