Opponents of using policy to stabilize the economy generally believe that
A)neither fiscal nor monetary policy have much impact on aggregate demand.
B)attempts to stabilize the economy decrease the magnitude of economic fluctuations.
C)unemployment and inflation are not cause for much concern.
D)economic conditions can easily change between the start of policy action and when it takes effect.

Question

Quizplus · Accepted Answer

Opponents of using policy to stabilize the economy generally believe that economic conditions can easily change between the start of policy action and when it takes effect. This is known as the "recognition lag" and the "implementation lag" and can make it difficult for policy to have its intended effect. Therefore, opponents argue that policy may do more harm than good by leading to unintended consequences.

Opponents of Using Policy to Stabilize the Economy Generally Believe