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The "Lucas Critique" Is That

Question 16

Multiple Choice

The "Lucas critique" is that:


A) macro data based on government surveys is inaccurate.
B) increasing unemployment to reduce inflation is more costly to society than economists traditionally think.
C) policy changes affect expectations, which in turn affect the impact of the policy.
D) policy changes can affect the economy only when they are expected.
E) in the medium run, output always returns to its natural level.

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