Why might economic policies aimed at stabilization actually ...

[student77]

Why might economic policies aimed at stabilization actually increase the magnitudes of economic fluctuations?
 
  What will be an ideal response?

Question 2

To find aggregate planned expenditures, which of the following must be added to consumption expenditure?
 
  i. net exports
  ii. investment
  iii. government expenditure on goods and services
  A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii

[juwms]

Answer to Question 1

Well-timed economic policies can reduce the magnitudes of economic fluctuations. But if the policies are poorly timed, they might work in the opposite direction of the desired outcome. The poor timing can come from lags in implementation, for instance, delay between the time that the policies are implemented and the time they take effect.

Answer to Question 2

E