The Great Moderation consensus about macroeconomic policy is that:
A) only monetary policy works against recessions, but fiscal policy is effective only in the long run.
B) expansionary monetary and fiscal policies can both reduce unemployment in the long run.
C) expansionary monetary and fiscal policies are both effective in the short run but not in the long run.
D) discretionary monetary and fiscal policies are effective in the short run and in the long run.

Question

Quizplus · Accepted Answer

The Great Moderation consensus suggests that both expansionary monetary and fiscal policies can be effective tools in the short run to combat economic downturns or recessions. However, it also acknowledges that these policies may not have the same effectiveness in the long run, due to factors like inflationary pressures or increasing public debt.

The Great Moderation Consensus About Macroeconomic Policy Is That