According to the Great Moderation consensus: I. fiscal policy should be the main stabilization tool.
II) the effectiveness of economic policy is limited by the political business cycle.
A) I only
B) II only
C) I and II
D) neither I nor II

Question

Quizplus · Accepted Answer

The Great Moderation consensus did not prioritize fiscal policy as the main stabilization tool. Rather, it emphasized the role of monetary policy in achieving economic stability. Additionally, it acknowledged the presence of the political business cycle, which limits the effectiveness of economic policy. Therefore, only statement II is consistent with the Great Moderation consensus.

According to the Great Moderation Consensus: I