Those who favor active use of monetary and fiscal policy believe that
A) the M1 money supply should be increased at a steady rate annually.
B) taxes should be increased during a recession in order to balance the federal budget.
C) the economy's self-correcting mechanism, if not stifled by perverse policies, will prevent prolonged periods of high unemployment.
D) discretionary changes in macroeconomic policy can help smooth the business cycle of a market economy.

Question

Quizplus · Accepted Answer

Those who favor active use of monetary and fiscal policy believe that discretionary changes in macroeconomic policy can help smooth the business cycle of a market economy. They believe that government intervention, such as changing interest rates or increasing government spending, can help stabilize the economy during periods of recession or inflation.

Those Who Favor Active Use of Monetary and Fiscal Policy