Asked by Joshua Skelton on May 04, 2024
Verified
Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output. How would this affect the arguments of those who oppose using policy to stabilize output?
Aggregate Demand
Sum total of the requirement for goods and services across an economy, based on a particular price level over a defined period.
Long-run Output
The total quantity of goods and services produced by an economy over a long period, when all inputs are considered variable.
- Comprehend the expenses associated with inflation and the effects of governmental financial policies on economic conditions.
- Analyze the effect of timing differences in monetary and fiscal policy on the economy's performance.
Verified Answer
RM
Rashunda MamboMay 08, 2024
Final Answer :
Those who oppose stabilization policy mostly argue that by the time policy can be put into action and affect aggregate demand, economic conditions may have changed so that the policy is no longer appropriate. If the economy tended to stay on one side of the natural rate of output for a long time, policymakers could worry less about lags.
Learning Objectives
- Comprehend the expenses associated with inflation and the effects of governmental financial policies on economic conditions.
- Analyze the effect of timing differences in monetary and fiscal policy on the economy's performance.