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. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Businesses make investment plans many months in advance. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president.  Which of the following are examples of automatic stabilizers? Check all that apply. Personal income taxes The federal funds rate Unemployment insurance benefits

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Asked Dec 8, 2019
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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.
 
The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates.
 
Businesses make investment plans many months in advance.
 
Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses.
 
Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president.
 
 
Which of the following are examples of automatic stabilizers? Check all that apply.
 
Personal income taxes
 
The federal funds rate
 
Unemployment insurance benefits
 
 
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Expert Answer

Step 1

The following are arguments in favor of active stabilization policy by the government:

a)The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates as it will aggregate demand during the downturns in the economy.

 

c)Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and busi...

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