Question

Consider the following statement: "A consistent countercyclical policy has no effect on employment and output, since individuals will recognize those policies as systematic and will anticipate them correctly." This statement is most closely associated with
Select one:
a. classical theory.
b. Keynesian theory.
c. new classical theory.
d. monetarist theory.

Answer 1

Answer:

c. new classical theory.

Explanation:

The new classical theory belives that grow, countries must open their economies, entrepreneurial development (risk taking), privatize state owned enterprises, and reform labor markets, such as by decreasing the authority of trade unions.

Moreover it also focused that there is no effect on the employment and the result or outcome as individuals recognized the policies in the correct way so that it helps to anticipate them

Hence, the third option is correct