Economics · New Classical Economics
The policy irrelevance proposition in New Classical Rational Expectations theory suggests that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1instability of the macroeconomic system alone can render government policies irrelevant.
- 2government policies can always be predicted and hence they are irrelevant.
- 3economic agents will correctly predict government policies and render them irrelevant.
- 4unless government policies are completely random, they will be anticipated by economic agents and rendered ineffective.✓
Correct answer
unless government policies are completely random, they will be anticipated by economic agents and rendered ineffective.
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