The idea that anticipated monetary policy cannot affect real variables such as real GDP or employment is known as
A)the Keynesian hypothesis.
B)the policy irrelevance proposition.
C)the job search model.
D)the monetary velocity theory.

Question

Quizplus · Accepted Answer

The policy irrelevance proposition is the idea that anticipated monetary policy cannot affect real variables such as real GDP or employment. This proposition is based on the assumption of rational expectations and is a key tenet of New Classical economics.

The Idea That Anticipated Monetary Policy Cannot Affect Real Variables