Those who favor a passive approach to policy believe that _____
A) discretionary monetary policy can be used to help an economy since monetary policy lags are short.
B) discretionary fiscal policy can be used to help an economy since fiscal policy lags are short.
C) lags associated with implementing policies are too long and unstable for discretionary policy to be effective.
D) despite the lags involved, implementing discretionary policy is preferable to inaction.
E) automatic stabilizers cannot be used to help an economy since monetary policy lags are short.

Question

Quizplus · Accepted Answer

Those who favor a passive approach to policy believe that lags associated with implementing policies are too long and unstable for discretionary policy to be effective. Therefore, they advocate for relying on automatic stabilizers instead of actively intervening in the economy with discretionary policies.

Those Who Favor a Passive Approach to Policy Believe That