Which of the following is an argument against using policy to stabilize the economy?
A)Recessions represent a waste of resources.
B)Pessimism on the part of households and firms may become a self-fulfilling prophecy.
C)"Leaning against the wind" requires policymakers to increase aggregate demand in recessions and reduce aggregate demand in booms.
D)Macroeconomic forecasting is not developed sufficiently to allow policymakers to change aggregate demand at the proper time.

Question

Quizplus · Accepted Answer

The argument against using policy to stabilize the economy highlighted in option D is that macroeconomic forecasting is not sufficiently developed, making it difficult for policymakers to accurately time their interventions to adjust aggregate demand appropriately. This uncertainty can lead to ineffective or counterproductive policy measures.

Which of the Following Is an Argument Against Using Policy