Critics of stabilization policy argue that
A)policy affects aggregate demand quickly, but the effects on aggregate demand are long-lived.
B)policy affects aggregate demand with a lag, and the effects on aggregate demand are long-lived.
C)policy affects aggregate demand with a lag, but the effects are short-lived.
D)policy does not affect aggregate demand.

Question

Quizplus · Accepted Answer

Critics of stabilization policy often argue that policy interventions, such as fiscal or monetary adjustments, affect aggregate demand with a delay due to the time it takes to recognize an economic issue, implement policies, and for those policies to take effect. Additionally, they argue that once these effects begin, they tend to be long-lived, complicating further policy adjustments and potentially leading to economic instability or inefficiency.

Critics of Stabilization Policy Argue That