Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce.This task is the realm of
A)growth policy.
B)stabilization policy.
C)labor policy.
D)inflation policy.

Question

Quizplus · Accepted Answer

Stabilization policy focuses on managing aggregate demand to ensure that it does not exceed the economy's capacity to produce, thus maintaining stability in output, employment, and prices. Growth policy, on the other hand, focuses on increasing the economy's capacity to produce over the long run. Labor policy deals with issues related to the labor market, such as minimum wage and employment regulations. Inflation policy is a specific aspect of stabilization policy that targets inflation specifically.

Policy Makers Should Manage Aggregate Demand So That It Grows