Asked by ka ki cheng on Jun 07, 2024
Verified
To stabilize the economy rational expectations theorists favor the use of
A) wage and price controls.
B) discretionary fiscal policy.
C) discretionary monetary policy.
D) policy rules.
Rational Expectations Theorists
Economists who believe that individuals and firms use all available information to make forecasts and decisions, leading markets to balance out over time.
Policy Rules
Guidelines or principles that govern the formulation and implementation of monetary and fiscal policies by authorities.
Discretionary Policy
Economic policies based on the discretionary judgment of policymakers rather than set rules, often involving fiscal or monetary actions.
- Understand the arguments for and against the use of policy rules to stabilize the economy.
Verified Answer
Learning Objectives
- Understand the arguments for and against the use of policy rules to stabilize the economy.
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