Which of the following statements is likely to be made by an economist who does not believe in activist monetary policy? (1)The more closely monetary policy can he designed to meet the particulars of a given economic environment,the better.(2)Because of long and uncertain time lags,activist monetary policy may be destabilizing rather than stabilizing.(3)There is sufficient flexibility in wages and prices in modern economies to allow the economy to equilibrate in reasonable speed at the natural level of Real GDP,(4)The "same-for-all-seasons" monetary policy is the way to proceed.(5)There is evidence that monetary policy in the mid-1970s caused a recession.
A) (1),(2),and (3)
B) (1),(4),and (5)
C) (2),(3),and (4)
D) (3),(4),and (5)
E) (1)only

Question

Quizplus · Accepted Answer

Economists who do not believe in activist monetary policy argue that due to long and uncertain time lags, such policies may be more destabilizing than stabilizing (2), believe in the economy's ability to adjust naturally without intervention due to flexible wages and prices (3), and favor a consistent, non-reactive monetary policy approach (4).

Which of the Following Statements Is Likely to Be Made