Opponents of active stabilization policy
A)advocate a monetary policy designed to offset changes in the unemployment rate.
B)argue that fiscal policy is unable to change aggregate demand or aggregate supply.
C)believe that the political process creates lags in the implementation of fiscal policy.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Opponents of active stabilization policy believe that the political process creates lags in the implementation of fiscal policy, which means that by the time the policy is enacted, the economy may have already corrected itself. Therefore, they argue that active stabilization policy can often be ineffective and may even do more harm than good. Option A is incorrect because it refers to monetary policy, which is different from stabilization policy. Option B is also incorrect because fiscal policy has been shown to have an impact on both aggregate demand and aggregate supply.

Opponents of Active Stabilization Policy