Those who desire that policymakers stabilize the economy would advocate which of the following when aggregate demand is insufficient to ensure full employment?

Question

Quizplus · Accepted Answer

Decreasing taxes would lead to an increase in disposable income and, subsequently, an increase in consumption, which would increase aggregate demand and help stabilize the economy. Decreasing the money supply or government expenditures would decrease aggregate demand and potentially exacerbate the problem of insufficient demand, and increasing taxes would decrease disposable income and consumption, also decreasing aggregate demand.

Those Who Desire That Policymakers Stabilize the Economy Would Advocate