Each of the following is a reason why macroeconomic policy should be conducted by automatic rules rather than discretion by authorities except
A) the fear that people appointed to authorities will be incompetent.
B) the fear that the appointed authorities might not have the right objectives.
C) the fear that the appointed authorities will use good judgment and make the correct decisions.
D) the fear that short-run political objectives will outweigh longer-run economic objectives.

Question

Quizplus · Accepted Answer

The correct answer is C because the fear that appointed authorities will use good judgment and make the correct decisions is not a reason against discretionary macroeconomic policy. In fact, it's desirable for authorities to use good judgment and make correct decisions; the concerns listed in the other options relate to potential pitfalls of discretionary policy, such as incompetence, misaligned objectives, and short-term political pressures.

Each of the Following Is a Reason Why Macroeconomic Policy