Question

Classical economists believed that: a discretionary fiscal policies were useful for dampening business cycle fluctuations. b monetary policy was not useful in fighting recessions. c rational expectations were held by most of the public. d potential GDP can be increased by expansionary fiscal policies. e short-run goals were more important than long-run goals.

Answer 1

Answer:

c rational expectations were held by most of the public.

Explanation:

Classical economists only focused on the long run goals. the problem is that Ricardo and Smith are still waiting for the long run to show up. Theoretically, classical economics are great, but they failed miserably in the real world. The problem is that it is based on the assumption that human beings are rational and that they will always act rationally, regardless of what is going on. For example, even if you are fired, classical economists say that your expenses should not decrease. But on the real world, if you are fired, the money you have decreases and so will your expenses.