What is the Lucas critique, and why was it so important to macroeconomists in the 1970s?
What will be an ideal response?
The Lucas critique suggests that historical relationships between economic variables will be changed significantly when there are significant changes in the economy such as new policies. In the 1970s this was important as it explained the movement of the Phillips curve.
Economics
You might also like to view...
If Deluxe Fruits offers a $1.00 coupon for their fruit cups, this is an example of ________.
A) second-degree price discrimination B) first-degree price discrimination C) arbitrage D) market segmentation
Economics
Government means tested programs ________ the overall poverty rate.
A. substantially decrease B. have not changed C. lead to an increase in D. drop to zero
Economics