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Unformatted text preview: But there are some advantages to active policy. Active policy allows policymakers to respond to shifts in a complex economy and steer the economy in the optimal direction. For instance, an excellent policymaker may be able to keep the economy growing steadily without inflation if she is given complete control of macroeconomic policy. Similarly, active policy, at least in theory, gives control to those individuals who are considered optimally capable to deal with the fluctuations in the economy. That is, active policy allows the sharpest policymakers of the time to control the economy. Finally, the ability to create different expectations between the policymakers and the public can be an advantageous policy tool, as described in the previous paragraph. Passive policy In contrast to active (or discretionary) policy is passive policy (or policy by rule). Under In contrast to active (or discretionary) policy is passive policy (or policy by rule)....
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This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10