Which of the following is correct?
A)Economic forecasts are precise and aggregate spending responds almost immediately to interest rate changes.
B)Economic forecast are precise and aggregate spending responds to interest rate changes with a lag.
C)Economic forecasts are imprecise and aggregate spending responds almost immediately to interest rate changes.
D)Economic forecast are imprecise and aggregate spending responds to interest rate changes with a lag.

Question

Quizplus · Accepted Answer

Economic forecasts are not always accurate and can be imprecise, therefore choice A and B can be ruled out. Additionally, changes in interest rates may take time to be fully reflected in aggregate spending, hence why there is often a lag in response. Therefore, choice D is the most appropriate.

Which of the Following Is Correct