Answer:
b. increase government expenditures or decrease the money supply
Step-by-step explanation:
If the government wanted to stabilize output, there are a couple of levers they could pull. These are fiscal policies and monetary policies, fiscal policy, is all about changing how much we spend, if government has more money to spend, they can better negotiate and also decide how money is spent to a degree. So, the theory is if the government spends more, that would increase total output. The second lever to pull is messing with the money supply, monetary policy, If maybe there's more money out there, lower interest rates, it might increase output however because we are dealing with the price of imported oil decreasing the money supply would be the move to make because by decreasing the money supply we can make our currency more valuable, it's important to remember that the price of imported oil would not be affected by domestic monetary policies. If the money supply were increased our currency would devalue which would be counterproductive because a weaker currency means we pay more for imports.