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Suppose That Changes in Aggregate Demand Tended to Be Infrequent

question 138

Essay

Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?


Definitions:

Framing

The way in which information is presented to influence perceptions, decisions, and judgments; often used in contexts of communication and psychology.

Nudge

A framing of choices by which governments and companies can, without coercion or altered incentives, encourage people to make choices that support their health, retirement savings, and well-being.

Choices

The act of selecting between two or more possibilities when faced with a decision.

Belief Perseverance

The phenomenon wherein individuals maintain their beliefs even in the face of contradictory evidence.

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