The idea that new policies change the economic rules and affect economic behavior,so that no one can safely assume that historical relationships between variables will hold when policies change,is known as
A)Okun's Law.
B)Say's Law.
C)the equation of exchange.
D)the Lucas critique.

Question

Quizplus · Accepted Answer

The idea that new policies can break down the historical relationship between economic variables is known as the Lucas critique, named after Nobel Prize-winning economist Robert Lucas. The Lucas critique emphasizes that economic actors may change their behavior in response to changes in economic policies, making it difficult to predict economic outcomes solely based on historical data.

The Idea That New Policies Change the Economic Rules and Affect