Formulating an appropriate policy response to an economic disturbance is difficult since policy makers are often unsure about
A)the timing and magnitude of the effects of a proposed policy measure
B)whether a disturbance is temporary or permanent
C)how the economy really works
D)how a proposed policy measure affects people's expectations
E)all of the above

Question

Quizplus · Accepted Answer

All of the options mentioned are challenges that policy makers face when formulating an appropriate response to an economic disturbance. Uncertainty about the timing and magnitude of the effects, the temporary or permanent nature of the disturbance, limited understanding about how the economy really works, and the impact of policy measures on people's expectations contribute to the complexity of the issue. As a result, policy makers must consider all of these factors when crafting a response.

Formulating an Appropriate Policy Response to an Economic Disturbance Is