Which of the following best describes the policy ineffectiveness proposition?
A)Monetary policy cannot change real GDP in a regular or predictable way.
B)Policymakers can be effective in changing real GDP only if people's expectations are correct.
C)Monetary policy can change real GDP only if the Fed pursues a consistent,stable growth rate of the real money supply.
D)Fiscal policy is totally ineffective in changing real GDP in both the short run and the long run.

Question

Quizplus · Accepted Answer

The policy ineffectiveness proposition states that monetary policy cannot change real GDP in a predictable or reliable way, as the economy is too complex and subject to unpredictable shocks and changes in people's expectations. This suggests that the effectiveness of monetary policy is limited and uncertain.

Which of the Following Best Describes the Policy Ineffectiveness Proposition