A goal of monetary policy and fiscal policy is to
A)offset the shifts in aggregate demand and thereby eliminate unemployment.
B)offset shifts in aggregate demand and thereby stabilize the economy.
C)enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.
D)enhance the shifts in aggregate demand and thereby increase economic growth.

Question

Quizplus · Accepted Answer

The primary goal of both monetary and fiscal policy is to stabilize the economy by offsetting shifts in aggregate demand. This helps to moderate the boom and bust cycles, keeping inflation and unemployment in check. Enhancing shifts in aggregate demand could lead to excessive inflation or bubbles, rather than stability.

A Goal of Monetary Policy and Fiscal Policy Is to