Question

_____ macroeconomists focused on the _____ effects of _____ policy on the aggregate price level, ignoring any _____ effects on aggregate output.

Answer 1

Answer:

CLASSICAL macroeconomists focused on the LONG-RUN effects of MONETARY policy on the aggregate price level, ignoring any SHORT-RUN effects on aggregate output.

Explanation:

Classical macroeconomists focused mostly on the long-run since they perceived the economy was self-adjusting. That means that they should only set a guideline for the economy, and the economy itself would adjust to fulfill that guideline.

For example, just because the Fed carries out an expansionary monetary policy by lowering interest rates, it doesn't mean that the economy will start to grow and unemployment will lower. Other adjustments are necessary, like a tax reduction or an increase in government spending.