Question

Which one factor—(a) economists’ ignorance of how the economy works, (b) shorter time lags between policy implementation and the response of economic agents to policy changes, (c) inaccurate and incomplete statistics, (d) pressure from private lobbyists for government favors, or (e) the president’s desire to get reelected—would likely assist the federal government in achieving macroeconomic stability? Explain your answer.

Answer 1

Often an economy's success depends on the macro economic indicators of the country. Of the given choices, shorter time lag between policy implementation and response of economic agents to policy changes would assist the federal government to achieve Macro economic stability. Main reason is that once you set in the policies that are planned to be implemented and the corresponding response to those policies by the economic agents like the aggregate consumption, supply factors, price and income levels etc is what helps in stabilising the economy. The lesser the time lapse between policy implementation and response by economic agents greater is the stability enjoyed by macro economic variables.

a) economists ignorance of the economy will not aid in stabilising the Marco economic variables.

C) It is not incorrect and inaccurate variables instead it should be correct and accurate statistics that will aid the federal government.

d) pressure from private lobbies can adversely affect the economy, if the government doesn't take into consideration the larger public.

e) The presidents desire to reelected doesn't also ensure macro economic stability to the federal government.