Those who favor a passive approach to policy often argue that changes in prices and wages will shift the short-run aggregate supply curve
A)before active policy shifts the aggregate demand curve
B)only after active policy shifts the aggregate demand curve
C)more than active policy shifts the aggregate demand curve
D)less than active policy shifts the aggregate demand curve
E)in a direction opposite to the shift in the aggregate demand curve caused by active policy

Question

Quizplus · Accepted Answer

A passive approach to policy typically involves letting the market adjust on its own without government intervention. Changes in prices and wages will eventually shift the short-run aggregate supply curve, but this process may occur before any active policy shifts the aggregate demand curve. Therefore, choice A is the best answer.

Those Who Favor a Passive Approach to Policy Often Argue