Which of the following statements is true ?
A) A political business cycle is one created by the incentive for politicians to make policies in accordance with benefit-cost analysis.
B) Adaptive expectations theory argues that the best indicator of the future is all of the available information.
C) Incomes policies tend to be very effective over time.
D) Incomes policies include jawboning, wage-price guidelines, and wage-price controls.

Question

Quizplus · Accepted Answer

Incomes policies are government policies aimed at regulating wages and prices in order to control inflation. Jawboning, wage-price guidelines, and wage-price controls are examples of incomes policies. Therefore, statement D is true. Statement A is incorrect because a political business cycle refers to the tendency of politicians to manipulate the economy in order to win elections. Statement B is incorrect because adaptive expectations theory argues that individuals use past experiences to make predictions about the future, not all available information. Statement C is incorrect because incomes policies are often criticized for being ineffective in the long run.

Which of the Following Statements Is True