One of the Strongest Arguments Against Active Stabilization Policy Is

question 104

Multiple Choice

One of the strongest arguments against active stabilization policy is

• A)that recognition lags make timely intervention very difficult.
• B)the economy corrects itself very slowly.
• C)the inability of economic theory to suggest appropriate policy.
• D)the difficulty of obtaining agreement on monetary policy.

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Definitions:

Per Capita Income

A measure of the average income earned per person in a specified area over a defined period of time, often used as an indicator of economic health.

WARP

Weak Axiom of Revealed Preference, a theory in economics that assumes if a consumer prefers product A over B when both are available, then they will not choose B when A is available.

Bundle

An assortment of items or services combined and offered for sale as a complete set.

Laspeyres Price Index

A measure of inflation computed by taking the ratio of the total cost of purchasing a specified basket of goods at current prices to the cost of those same goods at base-year prices.