Which of the following about new classical macroeconomics is FALSE?
A)It returned to the classical view that shifts in the aggregate demand curve affect only the aggregate price level, not aggregate output.
B)It challenged traditional arguments about the slope of the short-run aggregate supply curve based on the concept of rational expectations.
C)It suggested that changes in productivity cause economic fluctuations.
D)It embraced the Keynesian notion that changes in aggregate demand may affect aggregate output in the short run.

Question

Quizplus · Accepted Answer

New classical macroeconomics did not embrace the Keynesian notion that changes in aggregate demand may affect aggregate output in the short run, but rather returned to the classical view that shifts in the aggregate demand curve affect only the aggregate price level, not aggregate output. Choices A, B, and C are true statements about new classical macroeconomics.

Which of the Following About New Classical Macroeconomics Is FALSE