Critics of stabilization policy argue that
A)there is a lag between the time policy is passed and the time policy has an impact on the economy.
B)the impact of policy may last longer than the problem it was designed to offset.
C)policy can be a source of,instead of a cure for,economic fluctuations.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All three statements are true and are commonly cited as criticisms of stabilization policy. The time lag between policy implementation and its impact on the economy can reduce its effectiveness. Additionally, the effects of policy may continue even after the original problem has been rectified. Finally, some critics argue that policy itself can create economic fluctuations by distorting market signals and creating unintended consequences.

Critics of Stabilization Policy Argue That