Figure 13-3

-In Figure 13-3 above,given the unstable demand for money and a stable commodity demand,a stable output level at C would best be promoted by

Question

Figure 13-3
 
-In Figure 13-3 above,given the unstable demand for money and a stable commodity demand,a stable output level at C would best be promoted by

Quizplus · Accepted Answer

Targeting interest rates by the Fed would be the best choice for promoting a stable output level at C in this situation because the unstable demand for money indicates that changes in interest rates would have a significant impact on the overall level of spending and economic activity. By targeting interest rates, the Fed can help to stabilize the economy and keep output at a consistent level over time. Decreasing taxes or increasing government expenditures may also have some positive impact on output, but these policies could be less effective in the face of the unstable demand for money. Decreasing government expenditures could actually have a negative impact on output by reducing overall spending in the economy.

Figure 13-3 -In Figure 13-3 Above,given the Unstable Demand for Money and Demand