Those Who Favor Active Use of Monetary and Fiscal Policy

question 157

Multiple Choice

Those who favor active use of monetary and fiscal policy believe that

• A) the M1 money supply should be increased at a steady rate annually.
• B) taxes should be increased during a recession in order to balance the federal budget.
• C) the economy's self-correcting mechanism, if not stifled by perverse policies, will prevent prolonged periods of high unemployment.
• D) discretionary changes in macroeconomic policy can help smooth the business cycle of a market economy.

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