An important lesson from the Lucas critique that policymakers need to heed is that policy will have its desired impact when policymakers:
A) the Lucas critique.
B) why the Lucas critique is not correct.
C) adaptive expectations.
D) the simple Phillips curve.

Question

Quizplus · Accepted Answer

The Lucas critique emphasizes the importance of considering how people's expectations change in response to policy. It suggests that policies based on historical data without considering these changes may not have their intended effect because individuals adjust their behavior based on their expectations of future policy actions.

An Important Lesson from the Lucas Critique That Policymakers Need