Which of the Following Is an Argument Against Trying to Use

question 20

Multiple Choice

Which of the following is an argument against trying to use policy to stabilize the economy?

• A)Recessions represent a waste of resources.
• B)Pessimism on the part of households and firms may become a self-fulfilling prophecy.
• C)"Leaning against the wind" requires policymakers to increase aggregate demand in recessions and reduce aggregate demand in booms.
• D)Macroeconomic forecasting is not developed sufficiently to allow policymakers to change aggregate demand at the proper time.

---

Definitions:

Time Series

A sequence of data points measured at successive points in time, typically at uniform intervals, used for forecasting trends.

Smoothing Constant

A parameter used in exponential smoothing models that determines the weight given to the most recent observation in forecasting.

Exponentially Smoothed

A technique used in time series analysis that applies decreasing weights to older observations, with more recent data having more influence on the forecast.

Exponentially Smoothed

A data smoothing technique that gives recent observations more weight than older observations, often used in time series analysis.