When deciding on an appropriate course of action to counter a recessionary gap, which of the following do policy makers consider?

Question

Quizplus · Accepted Answer

Policy makers consider all of the factors listed in the options when deciding on an appropriate course of action to counter a recessionary gap. The slope of the short-run Phillips curve is relevant because it shows the trade-off between inflation and unemployment. The costs of inflation and unemployment are crucial to weigh because any policy action taken to address a recessionary gap will have consequences on these factors. Finally, the efficiency of the economy's self-correcting mechanism is also considered because it may affect the effectiveness of policy actions taken.

When Deciding on an Appropriate Course of Action to Counter