Those who favor an active approach to policy believe that
A)discretionary monetary policy cannot be used to help the economy since monetary policy lags are long
B)discretionary fiscal policy cannot be used to help the economy since fiscal policy lags are long
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 an active approach to policy believe that discretionary policy, despite the lags involved, is preferable to inaction. This suggests that they believe implementing policies is important even if there are delays in their effects. Options A, B, and C all suggest that discretionary policy is not feasible or effective, which is not consistent with an active approach.

Those Who Favor an Active Approach to Policy Believe That