Suppose the government is considering a policy proposal that would subsidize the consumption of food for needy individuals by 10%. To assess the cost of this policy, you identify the amount spent on food by this group of individuals currently and then take 10% of that amount to be the cost of the policy. According to the Lucas critique, the cost calculated this way would be (choose one) roughly right. over-stating the cost. understating the cost irrelevant.

Suppose the government is considering a policy proposal that would subsidize the consumption of food for needy individuals by 10%. To assess the cost of this policy, you identify the amount spent on food by this group of individuals currently and then take 10% of that amount to be the cost of the policy. According to the Lucas critique, the cost calculated this way would be (choose one) roughly right. over-stating the cost. understating the cost irrelevant.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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