Believers in Fixed Rules Maintain That

question 61

Multiple Choice

Believers in fixed rules maintain that

• A)with accurate forecasts, we can see inflation coming at least one year ahead of time.
• B)the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly.
• C)we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy's self-correcting mechanism.
• D)the economy's self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.

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Definitions:

WWII

World War II, a global conflict that lasted from 1939 to 1945, involved most of the world's nations, and was marked by significant battles across Europe, Asia, and the Pacific.

Frictionally Unemployed

Individuals temporarily out of work while transitioning between jobs, often considered to be a normal aspect of a healthy economy.

Crackerjack

A brand of caramel-coated popcorn and peanuts, often associated with being a classic American snack.

Discouraged

Refers to individuals who are not actively seeking employment due to believing that there are no job opportunities available for them.