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Trying to Stabilize the Economy Through Discretionary Policy

Question 29

Multiple Choice

Trying to stabilize the economy through discretionary policy


A) is easier using fiscal policy, since its effects are better understood than those of monetary policy
B) is easier using monetary policy, since its outside lag is shorter than that of fiscal policy
C) is easier using monetary policy, since its inside lag is shorter than that of fiscal policy
D) is not necessary, since automatic stabilizers always provide enough built-in stability
E) is virtually impossible, since neither fiscal nor monetary policy affects the unemployment rate in the short run

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