Economics · Macroeconomics
The 'Policy Ineffectiveness Proposition' associated with New Classical economists (Lucas and Sargent) states that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Fiscal policy is more effective than monetary policy
- 2Anticipated changes in aggregate demand policy cannot change real output or employment even in the short run✓
- 3Only supply-side policies can change real output
- 4Monetary policy is ineffective in the long run only
Correct answer
Anticipated changes in aggregate demand policy cannot change real output or employment even in the short run
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