Policies that are used to affect planned aggregate expenditure,with the objective of eliminating output gaps,are called _________ policies.

Question

Quizplus · Accepted Answer

Stabilization policies aim to stabilize the economy by adjusting planned aggregate expenditure to eliminate output gaps, which are the difference between actual output and potential output. This can be done through fiscal policy (changes in government spending and taxes) or monetary policy (changes in interest rates and money supply). Structural, cyclical, productivity, and autonomous policies do not specifically aim to eliminate output gaps.

Policies That Are Used to Affect Planned Aggregate Expenditure,with the Objective