Those who favor a passive approach to policy believe that
A)discretionary monetary policy can be used to help the economy since monetary policy lags are short
B)discretionary fiscal policy can be used to help the economy since fiscal policy lags are short
C)lags associated with implementing policies are too long and unstable for discretionary policy to be effective
D)despite the lags involved,implementing discretionary policy is preferable to inaction
E)none of the above

Question

Quizplus · Accepted Answer

Those who favor a passive approach to policy believe that lags associated with implementing policies are too long and unstable for discretionary policy to be effective. Therefore, they argue that it is better to rely on automatic stabilizers and allow the economy to adjust on its own rather than implementing discretionary policy.

Those Who Favor a Passive Approach to Policy Believe That