When aggregate demand is too low to ensure full employment,those in favor of using monetary and fiscal policy to stabilize the economy might recommend
A)cutting government spending.
B)raising taxes.
C)having the Fed purchase government bonds.
D)reducing the money supply.

Question

Quizplus · Accepted Answer

When aggregate demand is too low, the Federal Reserve can use monetary policy by purchasing government bonds to inject money into the economy, thus increasing aggregate demand and stimulating economic growth. Cutting government spending, raising taxes, and reducing the money supply would all work towards decreasing aggregate demand, which is the opposite of what is needed in this scenario.

When Aggregate Demand Is Too Low to Ensure Full Employment,those