_____29. New Classical Economics probably received its name due to the fact that
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Question
_____29. New Classical Economics probably received its name due to the fact that it:
changed most of the old ideas of the Classical School of Thought.
embraced all of the old ideas from the Classical School of Thought.
was a retreat from Keynesian Economics and a return to the Classical idea of government non-intervention.
all of the above.
none of the above.
_____30. The New Classical Policy Ineffectiveness Proposition in effect is a belief that:
all government policies are wrong.
Monetary Policy is more effective than fiscal policy.
changes to output and employment cannot be achieved by aggregate demand management.
governmental policy, while effective in the short run, loses its effectiveness as time goes by.
inflation cannot be slowed or stopped by governmental policies.
_____31. A problem with the New Classical Theory of Rational Expectations is:
not all individuals use all available information.
that is does not take into consideration the cost of collecting information.
markets do not always “clear”
none of the statements are problems.
all of the statements are problems.
_____32. Supply-side economists disagree with Keynes that the level of income is the most important determinant of the level of investment. Supply-siders feel that which factor is the most important determinant of the level of investment?
the nominal interest rate.
the inflation rate.
the tax rate.
none of the above is the most important determinant.
‘A’, ‘B’, and ‘C’ all are important determinants.
_____33. The idea that a decrease in the tax rate could actually increase tax revenues is demonstrated in:
the Theory of Rational Expectations.
the LM Curve.
the Laffer Curve.
the Phillips Curve.
the Theory of Tax Policy Ineffectiveness.
Explanation / Answer
29. The correct answer is option C: was a retreat from Keynesian Economics and a return to the Classical idea of government non-intervention.
30. The correct answer is option B: changes to output and employment cannot be achieved by aggregate demand management.
31. The correct answer is option C: none of the statements are problems.
32. The correct answer is option E:‘A’, ‘B’, and ‘C’ all are important determinants
33. The correct answer is option C: the Laffer Curve.
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