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 statements about the debate over stabilization policy are correct?
a. Advocates of active stabilization believe that implementation lags for fiscal and monetary policy do not exist.
b. Advocates of active stabilization policy believe that the government can adjust monetary and fiscal policy to counteract waves of excessive optimism and pessimism among consumers and businesses.
c. Advocates of active stabilization believe that automatic stabilizers have no effect on aggregate demand
d. Opponents of active stabilization believe that active fiscal and monetary policies have no effect on aggregate demand

Answer 1

Answer:

Option B                                  

Explanation:

In simple words, A policy of stabilisation refers to the package or group of indicators that have been presented to normalize a financial sector or economic system. The term may relates to initiatives in two separate situations: convergence of the economic cycle or stabilisation of its credit crunch. It is one type of unilateral strategy in any situation.

    Thus, from the above we can conclude that the correct option is B .