Government actions to change its budget in order to change AE and keep GDP close to its potential level is called:

Question

Quizplus · Accepted Answer

Stabilization policy refers to government actions, including fiscal measures like adjusting its budget, to stabilize the economy by influencing aggregate expenditure (AE) and keeping GDP close to its potential level. Running a deficit, a budget surplus, and monetary policy are tools or outcomes of broader economic policies, not specifically the actions to adjust AE for stabilizing GDP.

Government Actions to Change Its Budget in Order to Change