Critics of stabilization policy argue that
A)"animal spirits" must be offset by active monetary policy.
B)active monetary policy is necessary for steady economic growth.
C)the lag problem ends up being a cause of economic fluctuations.
D)active fiscal policy is required for steady economic growth.

Question

Quizplus · Accepted Answer

Critics of stabilization policy argue that the lag problem ends up being a cause of economic fluctuations. This is because stabilization policies (both monetary and fiscal) usually take time to have an impact on the economy, and by the time they do, they may not be needed anymore or they may have unintended consequences. Therefore, critics argue that stabilization policy can end up causing more harm than good.

Critics of Stabilization Policy Argue That