Policymakers who favour a passive approach to policy often argue that the passive approach is more effective than an active approach because changes in prices and wages will shift the short-run aggregate supply curve (SRAS).Why is the passive approach able to shift the SRAS?
A) because a passive policy will act faster than an active policy aimed at shifting the aggregate demand curve
B) because a passive policy will be effective only after an active policy shifts the aggregate demand curve
C) because a passive policy will shift the SRAS curve more than an active policy aimed at shifting the aggregate demand curve
D) because a passive policy will shift the SRAS curve less than an active policy aimed at shifting the aggregate demand curve

Question

Policymakers who favour a passive approach to policy often argue that the passive approach is more effective than an active approach because changes in prices and wages will shift the short-run aggregate supply curve (SRAS).Why is the passive approach able to shift the SRAS?  
A) because a passive policy will act faster than an active policy aimed at shifting the aggregate demand curve 
B) because a passive policy will be effective only after an active policy shifts the aggregate demand curve 
C) because a passive policy will shift the SRAS curve more than an active policy aimed at shifting the aggregate demand curve 
D) because a passive policy will shift the SRAS curve less than an active policy aimed at shifting the aggregate demand curve

Quizplus · Accepted Answer

A passive policy approach relies on the natural adjustments in the economy, such as changes in prices and wages, to shift the SRAS. These adjustments can often act more swiftly and efficiently than active policy measures aimed at influencing aggregate demand, as they do not require government intervention or time to implement policy changes.

Policymakers Who Favour a Passive Approach to Policy Often Argue