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b) govt policy affects aggregate demand with a lag. the impact of policy may last longer than the problem it was designed to offset. c) govt affects aggregate supply with a lag. c. policy can be a source of, instead of a cure for, economic fluctuations. D. Critics against the active stabilization policy argue that policies may destabilize the economy rather than help it due to long lags. d) govt policy does NOT affect aggregate demand Critics of stabilization policy argue that because of this lag, the Federal should not try to fine-tune the economy. 111. People's expectations, in turn, influence their present economic behaviors such as saving, investing, and spending, which limit the effectiveness of future stabilization policies. They claim that the Fed often reacts too late to changing economic conditions and, as a result, ends up being a cause of rather than a cure for economic fluctuations. 3. B. the impact of policy may last longer than the problem it was designed to offset. there is a lag between the time policy is passed and the time policy has an impact on the economy. (ii) the impact of policy may last longer than the problem it was designed to offset. Proponents of active stabilization policy maintain that government should use policy to reduce economic fluctuations. Critics of stabilization policy argue that: (i) there is a lag between the time policy is passed and the time policy has an impact on the economy. A. there is a lag between the time policy is passed and the time policy has an impact on the economy. c. the lag problem ends up being a cause of economic fluctuations. Critics of stabilization policy argue that. “animal spirits” must be offset by active monetary policy. d. active fiscal policy is required for steady economic growth. D. All of the above are correct. Critics of stabilization policy argue that. Critics of stabilization policy argue that a. there is a lag between the time policy is passed and the time policy has an impact on the economy. Due to these long lags, critics of active policy argue that such policies may destabilize the economy rather than help it: By the time the policies affect AD, the economy’s condition may have changed. Stabilization is to be accomplished primarily through the Critics of stabilization policy argue that. b. active monetary policy is necessary for steady economic growth. a) government (govt) affects aggregate demand very quickily. But the critics argue it is alright that expectations should be based on all the available information including the future impact of government policy—but then how does this theory of rational expectations leads to the conclusion or proves that government policy is ineffective or impotent—as the supporters of ‘Ratex’ try to establish? These critics contend that policymakers should focus on long-run … Question 26 answers. C. policy can be a source of, instead of a cure for, economic fluctuations. 5. Critics of stabilization policy argue that a. influenced policy debates over when interventions should occur and ... doxy had its critics, and many argued that the international commu- ... stabilization (the end of large-scale violence) than on democratic trans-formation. b. the impact of policy may last longer than the problem it was designed to offset. policy can be a source of, instead of a cure for, economic fluctuations. Stabilization policy is a strategy enacted by a government or its central bank that is aimed at maintaining a healthy level of economic growth and minimal price changes.

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