Consider policymakers who favour an active approach to policy.Which of the following is one of their beliefs?
A) Discretionary monetary policy CANNOT be used to help the economy because monetary policy lags are long.
B) Discretionary fiscal policy CANNOT be used to help the economy because fiscal policy lags are long.
C) Lags associated with implementing policies are too long and unstable for discretionary policy to be effective.
D) Despite the lags involved, implementing discretionary policy is preferable to inaction.

Question

Consider policymakers who favour an active approach to policy.Which of the following is one of their beliefs?  
A) Discretionary monetary policy CANNOT be used to help the economy because monetary policy lags are long. 
B) Discretionary fiscal policy CANNOT be used to help the economy because fiscal policy lags are long. 
C) Lags associated with implementing policies are too long and unstable for discretionary policy to be effective. 
D) Despite the lags involved, implementing discretionary policy is preferable to inaction.

Quizplus · Accepted Answer

Policymakers who favour an active approach to policy believe that despite the lags involved, implementing discretionary policy is preferable to inaction. This means that they believe that taking action through discretionary policy is better than doing nothing, even if there are delays in the implementation and response to the policy.

Consider Policymakers Who Favour an Active Approach to Policy