Question

The government has the ability to influence the level of output in the short run using monetary and fiscal policy. There is some disagreement as to whether the government should attempt to stabilize the economy.

Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply.

a.Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.
b. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates.
c. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president.
d. Businesses make investment plans many months in advance.

Which of the following are examples of automatic stabilizers? Check all that apply.
a. Unemployment insurance benefits
b. Personal income taxes
c. The discount rate

Answer 1

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.