The use of macroeconomic policies to smooth or moderate the business cycle is known as
A)aggregate demand management.
B)aggregate supply management.
C)automatic stabilization.
D)discretionary policy.

Question

Quizplus · Accepted Answer

Aggregate demand management involves using macroeconomic policies such as monetary and fiscal policy to stabilize fluctuations in the business cycle by adjusting the level of aggregate demand in the economy. This can be done by adjusting government spending, taxation, and interest rates. The aim is to prevent recessions and inflation by ensuring that demand does not fall below or exceed the economy's potential output.

The Use of Macroeconomic Policies to Smooth or Moderate the Business