Which of the following policies would someone who wants the government to follow an active stabilization policy recommend when the economy is experiencing unemployment above the natural rate?
A)decrease the money supply
B)increase government expenditures
C)increase taxes
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Someone who wants the government to follow an active stabilization policy would recommend increasing government expenditures when the economy is experiencing unemployment above the natural rate. This is because increasing government expenditures can lead to an increase in aggregate demand, which can help to stimulate economic activity and reduce unemployment. Decreasing the money supply or increasing taxes could have the opposite effect, causing aggregate demand to decrease and potentially exacerbating the problem of unemployment. Therefore, options A and C are not the best choice in this scenario.

Which of the Following Policies Would Someone Who Wants the Government