If the unemployment rate falls below its long-run level,which policies would be appropriate to stabilize output?
A)increase the money supply,increase taxes
B)increase the money supply,cut taxes
C)decrease the money supply,increase taxes
D)decrease the money supply,cut taxes

Question

Quizplus · Accepted Answer

Decreasing the money supply and increasing taxes are contractionary policies that can help stabilize output by cooling down an overheating economy when unemployment is below its natural rate.

If the Unemployment Rate Falls Below Its Long-Run Level,which Policies