Reducing business cycle fluctuations is an important goal of macroeconomic policy because it:

Question

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Reducing business cycle fluctuations helps keep inflation low because during a recession, aggregate demand decreases and businesses lower their prices to attract customers. This can lead to deflation or lower inflation. On the other hand, during a boom, aggregate demand increases and businesses raise their prices, leading to higher inflation. By reducing business cycle fluctuations, macroeconomic policy can help to stabilize prices and keep inflation in check.

Reducing Business Cycle Fluctuations Is an Important Goal of Macroeconomic