Which One of the Following Accurately States the View of Activists

question 13

Multiple Choice

Which one of the following accurately states the view of activists who favor discretionary stabilization policy?

• A) Neither monetary nor fiscal policy will exert an impact on the real level of economic activity.
• B) Since we have only limited ability to forecast the future direction of the economy, the best policy is to do nothing.
• C) Our ability to forecast the future direction of economic activity is quite good, and therefore, discretionary macroeconomic policy is now capable of eliminating fluctuations in the business cycle if policy makers would follow the advice of leading economists.
• D) The index of leading indicators and other forecasting tools provide policy makers with valuable information that permits them to institute stabilizing changes in macroeconomic policy.

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Definitions:

New Equilibrium Quantity

This refers to the quantity at which supply and demand are equal at a new price level after changes in the market.

Law of Demand

A principle stating that as the price of a product decreases, the quantity demanded increases, and vice versa, all else being equal.

Education Provided

The act or process of imparting or acquiring knowledge, skills, or values through various methods such as schooling, training, or research.

School-age Population

The group within a population that falls within the mandatory schooling age range, typically considered as children and adolescents.