Which of the following is true?
A)When increased government purchases or expansionary monetary policy does give the economy a boost, no one knows precisely how long it will take to do so.
B)Given the difficulties of timing stabilization policy, an expansionary monetary policy intended to reduce the severity of a recession may instead add inflationary pressures to an economy that is already overheating.
C)If velocity changes, but it moves in a fairly predictable pattern, the connection between money supply and GDP is still fairly predictable.
D)Economic advisors, even using sophisticated econometric models, cannot forecast what economy will do in the future with a high degree of accuracy.
E)All of the above are true.

Question

Quizplus · Accepted Answer

All of the statements are true. The unpredictability of the time lag between policy implementation and economic response, the risk of unintended consequences from stabilization policies, the interaction between money supply, velocity, and GDP, and the limitations of economic forecasting are all well-recognized challenges in macroeconomic policy.

Which of the Following Is True