The "policy ineffectiveness proposition" of the new classical attack on policy activism is based on the idea that
A)people will anticipate policy changes particularly those based on a feedback rule.
B)people will anticipate the effects of policy changes and act to offset these effects.
C)Both A and B are correct.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The "policy ineffectiveness proposition" posits that rational expectations lead people to anticipate policy changes and their effects, thereby neutralizing the intended impact of such policies. This encompasses both anticipating policy changes and acting to offset their effects.

The "Policy Ineffectiveness Proposition" of the New Classical Attack on Policy