Activists believe that
A) there is sufficient flexibility in wages and prices to allow the economy to equilibrate at full-employment Real GDP in a reasonable period of time.
B) discretionary fiscal policies do not work.
C) discretionary monetary policies do not work.
D) fine-tuning to smooth out the business cycle is feasible.

Question

Quizplus · Accepted Answer

Activists believe that fine-tuning, which refers to the use of various economic policy tools to smooth out the business cycle, is feasible. They believe that policymakers can use discretion in both fiscal and monetary policies to achieve full-employment and stabilize the economy. Therefore, option D is the correct choice.

Activists Believe That