? to t Test Direction Consider the issues below that must be assessed in determi

Question

? to t Test Direction Consider the issues below that must be assessed in determining the desirability of active versus passive pollicymaking identry which of these are assocated wit, economists who contend that active poicymakigi'jited and which are associated with economists who contend that passinmakng isjalid Pure competition s not typical in most markets, where imperflect competition predominates passive Price Bexibility on becausefrns abstprces meda etywhen and changes.lacive Wage fexibility s uncommon because labor market adjustments occur relatively slowy Which of the folowing is an argument in favor of passive policymaking? A Pure compettion is not typical in mosi markets B Prices are usualy stcky due to menu cests and thus do not adjuat in the short run C D Aggregate demand shocks have ide effed i, the shot run and no enec on real GOP nthe long rn The Philips curve relationship is stable in the shont run and predictabie in the long ut

Explanation / Answer

Pure competition is not typical in the market where imperfect competition predominates this need an Active Policymaking to ensure the consumers are not exploited in an imperfect market competition.

Price Flexibility needs a Passive policymaking because the market will adjust quickly even when the active policy is not made.

Wage Flexibility is uncommon because labor market adjusts slowly. It needs an active policymaking.

Policy making is there to facilitate market and trade so anything which harms consumer surplus and is slow to adjust need active policy-making and anything which adjusts quickly needs a passive policy.

Argument in favor of passive policy making

Prices are usually sticky in the short run and thus do not adjust in the short run quickly. So no matter what the policymakers do the price is not going to change quickly but will take time to adjust.

  

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