Why Should Policymakers Try to Stabilize the Economy

question 37

Multiple Choice

Why should policymakers try to stabilize the economy?

• A) because shocks that cause economic fluctuations are unpredictable
• B) because long lags may cause stabilization policies to have an opposite effect
• C) because monetary policy affects aggregate demand by changing interest rates
• D) because fiscal policy must go through a long political process

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