Stabilization Policy

4 important questions on Stabilization Policy

What are government policies that affect planned aggregate expenditure?

Stabilization policies aim to eliminate output gaps.

What does it mean to increase planned aggregate expenditure?

It involves raising total spending within an economy, affecting output and employment.

What happens when there is a decrease in planned aggregate expenditure?

A decline in economic activity occurs, leading to reduced output, employment, and income.
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What does the study of changes in the money supply focus on?

It analyzes the effects on economic activity and inflation rates.

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