Policies designed to stabilize economic activity are handicapped by
A)incomplete information about the way the economy works
B)uncertainty about the length or magnitude of a disturbance
C)lags or delays between the time a decision is made and the time it begins to affect economic behavior
D)incomplete information about the way expectations are formed and how expectations affect responses to policies
E)all of the above

Question

Quizplus · Accepted Answer

All of the above factors can pose challenges to policymakers attempting to stabilize economic activity. Incomplete information about the economy, uncertainty about the length or magnitude of a disturbance, lags in policy implementation, and incomplete understanding of expectations all make it difficult to design effective stabilization policies.

Policies Designed to Stabilize Economic Activity Are Handicapped by