Expectations about the future state of the economy

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People's expectations about the future state of the economy (in other words, their general pessimism or optimism about the future) are very important in determining their current economic behavior. Given that, I've had students in the past suggest that, instead of giving people reliable information about the economy, it would be better for the government to lie and tell people that everything is fine, even when it really isn't. Discuss the merits of such an approach. Would the government be able to prevent a recession by lying about the state of the economy?

Reference no: EM131194997

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