Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is insufficient to ensure full employment?
A)decrease the money supply
B)increase taxes
C)increase government expenditures
D)Do nothing and let markets correct themselves.

Question

Quizplus · Accepted Answer

Increasing government expenditures would increase aggregate demand, which would help to stabilize the economy and increase employment. Decreasing the money supply and increasing taxes would have the opposite effect, reducing aggregate demand and potentially worsening the economic situation. Doing nothing and letting markets correct themselves may not be effective in stabilizing the economy in the short-term, as it could exacerbate unemployment and lead to further economic recession.

Those Who Desire That Policymakers Stabilize the Economy Would Advocate