Asked by Daniel Romero on Apr 29, 2024

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Passive macroeconomic policy would rely on natural market forces and automatic stabilizers to close an expansionary gap.

Passive Macroeconomic Policy

A strategy where the government does not intervene or adjusts its policy measures in response to economic fluctuations.

Expansionary Gap

The situation that occurs when an economy's output exceeds its potential output, indicating overheating.

  • Discriminate between the impacts of active and passive economic policies on business cycles.
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JH
Jason HanceMay 03, 2024
Final Answer :
True
Explanation :
Passive macroeconomic policy is a hands-off approach that allows market forces and automatic stabilizers (like unemployment benefits and progressive taxation) to naturally correct for economic fluctuations. This means that the government does not actively intervene with fiscal or monetary policies, but rather allows the economy to adjust on its own.