The long-standing debate over rules versus discretion in macroeconomics centers on the following statement ________.
A)"discretionary policy can lead to bad long-run outcomes but rules lack flexibility in the short-run"
B)"the speed with which the self-correcting mechanism in the economy acts is in question"
C)"the speed with which unemployment tends to disappear is debatable"
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The statement in option A captures the main argument in the debate over rules versus discretion in macroeconomics, which is that while discretionary policy can offer short-term flexibility, it can lead to bad long-run outcomes. On the other hand, rules lack flexibility in the short-run but can provide a more stable and predictable environment for economic agents. Options B and C are not as relevant to the debate.

The Long-Standing Debate Over Rules Versus Discretion in Macroeconomics Centers