Conducting fiscal policy so that G = T + $\beta$ (u - u_n), where G is government expenditures, T is tax revenue, u is the unemployment rate, u_n is the natural rate of unemployment, and $\beta$ is a positive number, is an example of a(n): A) active rule. B) passive rule. C) discretionary policy. D) automatic stabilizer.

Question

Quizplus · Accepted Answer

This is an example of an active rule because it involves a formulaic approach to adjust fiscal policy based on the unemployment rate relative to the natural rate.

Conducting Fiscal Policy So That G = T β\betaβ (U - Un), Where G Is Government Expenditures, T Is

Conducting Fiscal Policy So That G = T $\beta$ (U - U_n), Where G Is Government Expenditures, T Is