Which statement do economists broadly consider to be TRUE?
A) A monetary rule can increase real GDP.
B) Discretionary fiscal policy is typically more effective than monetary policy in fighting recessions.
C) A nation's central bank should be managed by elected officials.
D) Discretionary monetary and fiscal policy cannot affect the long-run level of unemployment.

Question

Quizplus · Accepted Answer

Discretionary monetary and fiscal policy are generally considered by economists to have short-term effects on employment and output but do not affect the long-run level of unemployment. This is because, in the long run, unemployment tends to return to its natural rate, which is determined by factors such as the labor market's structure and policies unrelated to short-term monetary or fiscal policy.

Which Statement Do Economists Broadly Consider to Be TRUE