Suppose an economist who favours a passive approach observes a drop in real GDP caused by a decrease in aggregate demand.What is the economist most likely to think?
A) that the economy will recover by itself, before discretionary policy can correct the situation
B) that discretionary policy will correct the situation before the economy can recover by itself
C) that the imposition of policy rules will correct the situation before the economy can recover by itself
D) that aggregate supply will decrease

Question

Suppose an economist who favours a passive approach observes a drop in real GDP caused by a decrease in aggregate demand.What is the economist most likely to think?  
A) that the economy will recover by itself, before discretionary policy can correct the situation 
B) that discretionary policy will correct the situation before the economy can recover by itself 
C) that the imposition of policy rules will correct the situation before the economy can recover by itself 
D) that aggregate supply will decrease

Quizplus · Accepted Answer

The Answer is A

Suppose an Economist Who Favours a Passive Approach Observes a Drop