Which of the following is a feature of the 'New Classical' school of macroeconomics?
A. Importance of fiscal policy for stabilisation
B. Rational expectations and continuous market clearing
C. Liquidity trap as a central concept
D. Emphasis on sticky wages and prices
Answer: Option B
Solution (By JKSSB Mock Tests)
New Classical economics assumes rational expectations and continuous market clearing, implying that systematic monetary policy cannot systematically affect real output.
Explanation:
Soft loans are provided by multilateral agencies or governments at below-market interest rates with longer maturities and grace periods, often for development purposes.
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