Discount rate policy is ________ tool of the Fed in its attempts to influence ________, and thus the money supply

Suppose inflation is a threat because the current aggregate demand curve will increase by $600 billion at any price level. If the marginal propensity to consume is 0.75, federal policymakers can follow Keynesian economics and restrain inflation by:

a. decreasing tax revenues by $600 billion. b. decreasing government spending by $200 billion. c. increasing tax revenues by $200 billion. d. increasing government purchases by $150 billion.

Advocates of stabilization policy prefer quick medicine for economic ills. This leads some observers to favor fiscal policy while others endorse monetary policy. Describe the positions of each side in the debate and what seems to be the current consensus.

What will be an ideal response?