A classical economist spends a good deal of time worrying that:
A) policies will overshoot their output marks and can therefore never move GDP closer to its potential.
B) government spending will crowd private spending and investment out of the market.
C) stabilization policy is never sufficiently "fine-tuned."
D) aggregate demand is not sufficient to support GDP at its potential.
E) all of the above.
Solution Preview
The roles of government are to ensure the free workings of markets, using supply-side policies and to ensure a balanced budget.
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<br>Classical Theory - ...
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