These critics contend that policymakers should focus on long-run … influenced policy debates over when interventions should occur and ... doxy had its critics, and many argued that the international commu- ... stabilization (the end of large-scale violence) than on democratic trans-formation. a) government (govt) affects aggregate demand very quickily. b. active monetary policy is necessary for steady economic growth. d. active fiscal policy is required for steady economic growth. But the critics argue it is alright that expectations should be based on all the available information including the future impact of government policy—but then how does this theory of rational expectations leads to the conclusion or proves that government policy is ineffective or impotent—as the supporters of ‘Ratex’ try to establish? (ii) the impact of policy may last longer than the problem it was designed to offset. policy can be a source of, instead of a cure for, economic fluctuations. Stabilization is to be accomplished primarily through the Critics of stabilization policy argue that. Critics of stabilization policy argue that a. there is a lag between the time policy is passed and the time policy has an impact on the economy. b) govt policy affects aggregate demand with a lag. there is a lag between the time policy is passed and the time policy has an impact on the economy. “animal spirits” must be offset by active monetary policy. B. the impact of policy may last longer than the problem it was designed to offset. Stabilization policy is a strategy enacted by a government or its central bank that is aimed at maintaining a healthy level of economic growth and minimal price changes. Question 26 answers. Proponents of active stabilization policy maintain that government should use policy to reduce economic fluctuations. b. the impact of policy may last longer than the problem it was designed to offset. Critics of stabilization policy argue that because of this lag, the Federal should not try to fine-tune the economy. Critics of stabilization policy argue that. 3. Critics of stabilization policy argue that: (i) there is a lag between the time policy is passed and the time policy has an impact on the economy. the impact of policy may last longer than the problem it was designed to offset. c. the lag problem ends up being a cause of economic fluctuations. c) govt affects aggregate supply with a lag. People's expectations, in turn, influence their present economic behaviors such as saving, investing, and spending, which limit the effectiveness of future stabilization policies. d) govt policy does NOT affect aggregate demand Critics of stabilization policy argue that a. C. policy can be a source of, instead of a cure for, economic fluctuations. D. Critics against the active stabilization policy argue that policies may destabilize the economy rather than help it due to long lags. 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