Principles of Macroeconomics / Unit 8 MAC 0725 short lesson, about 20 seconds
Nonintervention or Stabilization
Captions available
The idea
Faced with a gap there are two choices. Nonintervention lets the economy correct itself; stabilization policy acts to close the gap sooner.
In practice
Both are policies. Choosing to wait is a choice.
Where people slip
The case for acting is that self-correction is slow and the unemployment real; the case for waiting is that policy arrives late and may push the wrong way.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Something wrong in this lesson? Flag it · Sources for Principles of Macroeconomics