Stabilization policies will probably be needed to deal with unemployment if:

Question

Quizplus · Accepted Answer

Stabilization policies, such as monetary or fiscal policy, are needed to deal with unemployment when aggregate demand falls and input prices are "sticky." When input prices are not "sticky," they adjust quickly to changes in demand and therefore may not require intervention by stabilization policies. When aggregate demand increases, unemployment typically declines on its own without the need for stabilization policies.

Stabilization Policies Will Probably Be Needed to Deal with Unemployment