Which of the following statements is broadly agreed upon by modern macroeconomists?
A)Monetary and fiscal policy can both be effective at decreasing unemployment in the short run but not in the long run.
B)Discretionary fiscal policy is typically an effective remedy for a recessionary gap except in special circumstances.
C)The central bank should set a specific target rate of inflation.
D)A monetary rule should be set by the central bank.

Question

Quizplus · Accepted Answer

Monetary and fiscal policy are generally seen as effective tools for managing short-term economic fluctuations, including unemployment, but they do not have the same impact in the long run due to factors like inflation expectations and natural rates of unemployment.

Which of the Following Statements Is Broadly Agreed Upon by Modern