1. “The new classical model does not eliminate policymakers’ ability to reduce unemployment because they  can always pursue policies that are more expansionary than the public expects.” Is this...

1. “The new classical model does not eliminate policymakers’ ability to reduce unemployment because they  can always pursue policies that are more expansionary than the public expects.” Is this statement true, false, or uncertain? Explain your answer.

2. What principle of rational expectations theory is used to prove the proposition that stabilization policy can have no predictable effect on aggregate output in the new classical model?