How do advocates of discretionary stabilization policy view frequent changes in spending and tax policy?
A. The changes make the economy more difficult to forecast.
B. The changes make life more difficult and hectic for Congress and the Fed.
C. The changes smooth out the business cycle, making planning easier.
D. The changes cause more instability in the economy and make planning more difficult.
Answer: C
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What are the effects of a tariff on a good on various groups and on the total surplus in the country that imposes the tariff?
What will be an ideal response?
Which of the following statements describes how the economy returns to long-run equilibrium following the inflationary gap?
a. Rising input prices facilitate a shift from SRAS1 to SRAS2.
b. Actual real output increases from RGDPNR to RGDP2.
c. A temporary positive shock shifts LRAS rightward.
d. Rising demand facilitates a shift from AD1 to AD2.