Arguments in favour of active economic policy include all of the following except:
A) failing to use monetary and fiscal policy leads to inefficient fluctuations in output and employment.
B) the Great Depression could have been avoided if the Federal Reserve in the U.S.had pursued a policy of steady money growth.
C) fluctuations in real GDP were less severe following World War II than those prior to World War I.
D) failure of policymakers to respond to large contractionary shocks to private spending caused the Great Depression.

Question

Quizplus · Accepted Answer

The argument in favor of active economic policy is that it can stabilize the economy by responding to fluctuations. However, option B suggests a passive approach of steady money growth, which is contrary to active policy intervention.

Arguments in Favour of Active Economic Policy Include All of the Following