Why doesn't stabilization policy work, according to economists using the misperceptions theory?
What will be an ideal response?
Stabilization policy requires taking systematic action to combat recessions (using stimulative policy) or to fight inflation (using restrictive policy). But policy works only if it is unanticipated, according to the misperceptions theory. So the use of stimulative policy in a recession would be anticipated and have no effect. Only unanticipated policy would work, but such a policy would have to be random, and could not be used to smooth the business cycle.
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The Congressional Budget Office estimates that ________ account(s) for less than 1 percent of health care costs in the United States
A) the payments to settle malpractice lawsuits and the premiums doctors pay for malpractice insurance B) advances in medical technology C) uninsured patients receiving treatment in hospital emergency rooms that could have been provided less expensively at doctor's offices D) the aging population
Changes in ________ that are intended to achieve macroeconomic policy objectives refer to fiscal policy
A) exchange rates B) interest rates C) government taxes and purchases D) the money supply
There is no relationship between the size of a bureau's budget and the income earned by the bureaucrat in charge of the bureau
a. True b. False
If an asset has a present value of $50 and appreciates at an interest rate of 4%, what is the asset's future value in 47 compounding periods?
A) Approximately $400 B) Approximately $316 C) Approximately $137 D) Approximately $1143