What would those who desire that policymakers stabilize the economy advocate when aggregate demand is insufficient to ensure full employment?
A) decreasing the money supply
B) decreasing taxes
C) decreasing government expenditures
D) decreasing government deficit

Question

Quizplus · Accepted Answer

Those who desire that policymakers stabilize the economy when aggregate demand is insufficient to ensure full employment would advocate for decreasing taxes. This would increase disposable income of households and firms, leading to an increase in consumer spending and investment spending, which would then stimulate aggregate demand and ultimately promote economic growth and full employment. Decreasing the money supply, government expenditures, or government deficit would not necessarily have the same effect on promoting aggregate demand and would likely have different macroeconomic implications.

What Would Those Who Desire That Policymakers Stabilize the Economy