Which of the following best reflects the nonactivist view of stabilization policy?
A) Monetary and fiscal policies exert little impact on the economy.
B) Discretionary policy changes often make matters worse.
C) Fiscal policy should be used to help stabilize the economy; monetary policy should not.
D) Expansionary monetary policy is the primary source of rapid economic growth.

Question

Quizplus · Accepted Answer

The nonactivist view of stabilization policy suggests that discretionary policy changes often do more harm than good in attempting to stabilize the economy. This view generally believes that the economy will self-correct over time without government intervention. Therefore, option B reflects this viewpoint as it suggests that policy changes can make matters worse rather than better. Options A, C, and D all suggest a more activist stance towards stabilization policy.

Which of the Following Best Reflects the Nonactivist View of Stabilization