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Discuss the pros and cons of using money/fiscal policy to impact aggregate demand (active stabilization).

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

1. Which of the following statements about the debate over stabilization policy are correct? Indicate all that apply.

a. Opponents of active stabilization believe that active fiscal and monetary policies do not affect aggregate demand.

b. Opponents of active stabilization policy believe that significant time lags in both fiscal and monetary policy often exacerbate economic fluctuations.

c. 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.

d. Advocates of active stabilization believe that automatic stabilizers do not affect aggregate demand.

 

2. Which of the following are examples of automatic stabilizers? 

a. Unemployment insurance benefits

b. The federal funds rate

c. Corporate income taxes

d. all of the choices

 

As you have learned in Unit 8 (this week), monetary and fiscal policy play important roles in economic stimulation and or stabilization. In this regard:

 

a. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? 

b. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy?

c. What specific fiscal policy tools would you use to stimulate aggregate demand and how?

d. What specific monetary policy tools would you use to stimulate aggregate demand and how?

e. What is your conclusion, should policymakers use the monetary and or fiscal policy to stimulate aggregate demand? Explain briefly.

What could be the economic impact of making marijuana legal throughout the nation? Make sure to discuss the macroeconomic impact along with pros and cons.

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