Final answer:
New classical economics advocates for a 'hands off' policy approach, relying on the economy's self-adjustment to full employment and discouraging active fiscal or monetary policy interventions by policymakers. Option A,D is correct.
Step-by-step explanation:
New classical economics suggests that the macroeconomy adjusts back to full employment on its own due to flexible prices, implying a vertical aggregate supply curve at full employment GDP.
The neoclassical view recommends a 'hands off' policy, indicating that policymakers should not engage in active fiscal or monetary policy, as such actions are believed to only cause inflation without affecting GDP or unemployment. This viewpoint was challenged by the advent of Keynesian economics post-Great Depression, which advocated for active fiscal policies to stimulate aggregate demand.
Addressing the multiple-choice question, the correct options that align with the tenets of new classical economics are: a) the economy will automatically move back to full employment whenever it diverges, and d) policymakers should not engage in fiscal or monetary policy.
The neoclassical model assumes that fiscal and monetary policies are ineffective in the long run at altering real GDP or unemployment, as these are determined by real economic factors.