If aggregate demand shifts because of a wave of optimism about stock prices, those who favor a policy that "leans against the wind" would advocate the

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Those who favor a policy that "leans against the wind" are advocating for policies that counteract excessive optimism or pessimism in the markets to prevent fluctuations that could lead to economic instability. In this case, an increase in aggregate demand due to a wave of optimism about stock prices would necessitate a decrease in aggregate demand through contractionary policies such as decreasing the money supply or increasing taxes. Option C proposes the correct combination of policies, where the Federal Reserve decreases the money supply and the government increases taxes to limit the excessive optimism in the markets.

If Aggregate Demand Shifts Because of a Wave of Optimism