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Identify the arguments in favor of (Pro) and opposed to (Con) the case of government intervention to stabilize economic cycles. Note that you might not place all items. PROSCONS CHOICES - Macroeconomics have not been able to accurately measure recessions. - Aggregate demand takes time to accommodate interest rate movements - Economists have not been able to correct their overestimation of the multiplier of fiscal policy. - There is a well documented set of policies that can attenuate business cycle fluctuation. - It is not possible to reject evidence in favor of the Phillips curve. - Householders are well suited to predict early the effects of monetary policy. Solution Pros Cons Aggregate demand takes time to accommodate interest rate movements Macroeconomics have not been able to accurately measure recessions There is a well documented set of policies that can attenuate business cycle fluctuation Economists have not been able to correct their overestimation of the multiplier of fiscal policy. It is not possible to reject evidence in favor of the Phillips curve. Householders are well suited to predict early the effects of monetary policy.

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Identify the arguments in favor of (Pro) and opposed to (Con) the case of government intervention to stabilize economic cycles. Note that you might not place all items. PROSCONS CHOICES - Macroeconomics have not been able to accurately measure recessions. - Aggregate demand takes time to accommodate interest rate movements - Economists have not been able to correct their overestimation of the multiplier of fiscal policy. - There is a well documented set of policies that can attenuate business cycle fluctuation. - It is not possible to reject evidence in favor of the Phillips curve. - Householders are well suited to predict early the effects of monetary policy. Solution Pros Cons Aggregate demand takes time to accommodate interest rate movements Macroeconomics have not been able to accurately measure recessions There is a well documented set of policies that can attenuate business cycle fluctuation Economists have not been able to correct their overestimation of the multiplier of fiscal policy. It is not possible to reject evidence in favor of the Phillips curve. Householders are well suited to predict early the effects of monetary policy

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