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Author Question: The new classical model has as its central idea that A) workers and firms have rational ... (Read 86 times)

B

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on: Jun 29, 2018
The new classical model has as its central idea that
 
  A) workers and firms have rational expectations.
  B) wage and price stickiness explain fluctuations in real GDP.
  C) shifts in aggregate demand have no impact on real GDP.
  D) the Federal Reserve should adopt a monetary growth rule.

Question 2

Do the assumptions of the perfectly competitive model describe all real-world markets? Explain.
 
  What will be an ideal response?


Hdosisshsbshs

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A

Answer to Question 2

No, the assumptions of perfect competition do not always hold in real-world markets. There are cases where the market fails to produce an efficient outcome. This situation can be due to a number of reasons such as imperfect competition or externalities.


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