In most cases, optimization in differences is faster and easier than optimization in levels because:
A) the former involves fewer steps to arrive at a conclusion.
B) the former only focuses on the key differences between options and ignores things in common.
C) the former focuses only on the benefits of an option, ignoring all calculations involving costs.
D) the former uses simpler arithmetic tools in comparison to the latter.
B
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At the equilibrium level of aggregate expenditure, what does aggregate expenditure equal? What happens at other levels of real GDP to bring about an equilibrium?
What will be an ideal response?
Econometric models of the U.S. economy generally agree
A) on the quantitative impact of monetary policy over a horizon of several years. B) that an increase in money growth will increase output in the short run. C) that an increase in money growth will decrease output in the short run. D) that an increase in money growth will decrease output in the long run. E) that "rational expectations" is the best way to generate policy forecasts.