There Is Considerable Discussion of Whether an Activist Policy Approach

question 44

Multiple Choice

There is considerable discussion of whether an activist policy approach is preferable over a strict rule approach.In this discussion, which of the following has been established?

• A)active policy is not impossible, but a full-employment bias may create too much inflation
• B) no activist policy rule has ever been created
• C)no exceptions to the imposed rule should ever be made even under extreme circumstances, otherwise policy makers lose credibility
• D)the economy can successfully be fine tuned as long as monetary policy decisions are announced in advance
• E)none of the above

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Definitions:

Price support Program

Government initiatives aimed at maintaining the market price of a good or service at a certain level through subsidies or purchases.

Government

The organization or system through which a community or nation is governed and regulated.

Price Elasticity Coefficient

A measure that calculates the responsiveness of quantity demanded or supplied of a product to a change in its price.

Demand

The willingness and ability of consumers to purchase a quantity of goods or services at various prices during a specific time period.