Question

The goal of monetary policy and fiscal policy is to
a.

enhance the shifts in aggregate demand and thereby increase economic growth.
b.

enhance the shifts in aggregate demand and thereby create fluctuations in output and employment.
c.

offset the shifts in aggregate demand and thereby stabilize the economy.
d.

offset the shifts in aggregate demand and thereby eliminate unemployment.

Answer 1

The correct answer is:

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

Monetary policy and fiscal policy are primarily aimed at stabilizing the economy by managing aggregate demand, especially during economic fluctuations. While they can influence economic growth and employment levels, their main goal is to reduce volatility and maintain stability in the economy.