It has been a debatable issue whether the government can stabilize the economy (i.e. eliminating the cyclical unemployment), and if so, how, or in other words, applying what kind of policies, fiscal or monetary.
We will see this debate unfold gradually in the next couple of weeks as well. However, we may first want to make sure what stabilization means.
Does it mean that there will be no business cycles at all so that the GDP will remain constant at the full employment level? If not, can anyone give a definition of government stabilization?
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