The correct statement about the economy.

Question

Why is it so difficult to "fine-tune" the American economy using discretionary macroeconomic policy? a) To be effective in stabilizing the economy, the impact of macroeconomic policy must be well timed, else the policy might instead destabilize the economy. b) Often it takes months for economists to recognize the macroeconomy's major shift in direction. c) Expansionary monetary policy depends on the willingness of banks to lend to people willing to borrow, and in a recession people may be reticent to borrow and banks to lend. d) In the American political system it is very difficult to pass any legislation quickly, and fiscal policy usually involves significant political trade-offs. e) All of the above

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Chapter 16, Problem 20SQ

To determine

The correct statement about the economy.

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Why is it so difficult to "fine-tune" the American economy using discretionary macroeconomic policy? a) To be effective in stabilizing the economy, the impact of macroeconomic policy must be well timed, else the policy might instead destabilize the economy. b) Often it takes months for economists to recognize the macroeconomy's major shift in direction. c) Expansionary monetary policy depends on the willingness of banks to lend to people willing to borrow, and in a recession people may be reticent to borrow and banks to lend. d) In the American political system it is very difficult to pass any legislation quickly, and fiscal policy usually involves significant political trade-offs. e) All of the above

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