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Which of the following is a reason the government can't completely control the business cycle?

A. Unemployment is unpredictable.

B. The government can't control interest rates.

C. It's difficult to accurately predict the economic future.

D. Government has no control over consumer spending.


I really can't seem to find the answer in m textbook.

Also this is an Economics question.

2 Answers

3 votes

Final answer:

The government can't completely control the business cycle primarily because it's difficult to accurately predict the economic future, and there are significant delays in legislation. Despite the influence government has on elements like interest rates, other factors such as natural unemployment rates are influenced by external, unpredictable forces.

Step-by-step explanation:

The reason the government can't completely control the business cycle is multifaceted. While option B suggests the government can't control interest rates, in reality, through its central bank, the government does influence interest rates. However, among the given choices, option C, "It's difficult to accurately predict the economic future," is the most accurate.

Estimating potential GDP and deciding whether to influence aggregate demand through tax changes or shifts in government spending are complex tasks challenged by the unpredictability of the economic future. Moreover, there is a significant lag time involved as Congress and the President work to pass legislation affecting the economy. Additionally, there are certain factors such as the natural rate of unemployment that are influenced by variables beyond government control, such as shifting demographics and unexpected changes in productivity.

User William YK
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3 votes

B the government cant control interest rates

User Grampa
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