How Do Critics of Stabilization Policy View the "Political Business

question 33

Multiple Choice

How do critics of stabilization policy view the "political business cycle"?

• A)They suggest shorter election cycles would improve stabilization.
• B)They believe that politicians cause economic instability, due mainly to the election schedule.
• C)They believe that the Fed can resist political pressure and stabilize the economy.
• D)They believe that politicians do not know enough economics in order to stabilize the economy.

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Definitions:

Loanable Funds

The supply of capital available for borrowing, influenced by interest rates and financial markets, which facilitates investments and purchases.

National Saving

The total amount saved by a country's economy, calculated as the sum of private and public savings, often representing the difference between national income and consumption.

Closed Economy

An economic system that does not interact with other economies in terms of trade, investment, or migration.

Closed Economy

An economic system that does not engage in international trade with outside countries and relies wholly on its own resources.