Stabilization policy refers to the use of:
A) only fiscal policy.
B) only monetary policy.
C) either fiscal or monetary policy.
D) policy to shift the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

Stabilization policy can be achieved through either fiscal or monetary policy, or a combination of both. Fiscal policy involves changes in government spending and taxation, while monetary policy involves changes in the money supply, interest rates, and other monetary variables. Both policies aim to stabilize the economy by influencing aggregate demand, output, and employment. Shifting the long-run aggregate supply curve is not a stabilization policy, as it focuses on the economy's potential output rather than short-term fluctuations.

Stabilization Policy Refers to the Use Of