Which of the Following Statements Correctly Describes the Policy Stance

question 106

Multiple Choice

Which of the following statements correctly describes the policy stance of a macroeconomist?

• A) A monetarist believes that the quantity of money should be constantly changed in order to offset changes in aggregate demand.
• B) A new classical macroeconomist believes that fiscal and monetary policy are required to maintain full employment.
• C) A Keynesian would believes that if taxes are always kept low and the quantity of money is kept on a steady growth path, no policy actions will be needed to maintain full employment.
• D) A classical macroeconomist believes that maintaining consistently low taxes will allow the economy to expand at an appropriate and rapid pace.

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Definitions:

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, often simplifying the understanding of cause and effect.

Human Intuition

Possessing the skill to comprehend matters on a gut level, bypassing analytical thought processes.

Random Sampling

A method in statistics for selecting a sample from a population in such a way that every individual has an equal chance of being chosen.

Overconfidence

An unjustified belief in one's abilities, knowledge, or skills, often leading to taking greater risks.