When deciding on an appropriate course of action to counter a recessionary gap, which of the following do policymakers consider?
A)The slope of the short-run Phillips curve
B)The costs of inflation and unemployment
C)The efficiency of the economy's self-correcting mechanism
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

Policymakers consider all of these factors when deciding on an appropriate course of action to counter a recessionary gap. They need to consider the slope of the short-run Phillips curve to determine the trade-off between inflation and unemployment. They also need to consider the costs of inflation and unemployment to determine the optimal level of output. Finally, they need to consider the efficiency of the economy's self-correcting mechanism to determine whether the recession will be temporary or prolonged.

When Deciding on an Appropriate Course of Action to Counter