Question

A goal of monetary policy and fiscal policy is to
a. offset the shifts in aggregate demand and thereby eliminate unemployment.
b. enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.
c. offset shifts in aggregate demand and thereby stabilize the economy.
d. enhance the shifts in aggregate demand and thereby increase economic growth.

Answer 1

The correct answer is:

**c. offset shifts in aggregate demand and thereby stabilize the economy.**

Monetary and fiscal policies are tools used to manage economic fluctuations, aiming to stabilize the economy by counteracting shifts in aggregate demand that can lead to unemployment or inflation.