The best policy response to a disturbance may be to do nothing if,
A)there are long and variable outside lags
B)a disturbance is short-lived
C)the inside and outside lags are both short
D)the recognition lag is negative
E)both A)and B

Question

Quizplus · Accepted Answer

The best policy response might be to do nothing if there are long and variable outside lags (making it hard to time interventions effectively) or if a disturbance is short-lived (since the economy might adjust on its own before policy measures take effect).

The Best Policy Response to a Disturbance May Be to Do