If unemployment is the most significant problem in an economy, which of the following actions would be an appropriate fiscal policy response?
A)A decrease in taxes
B)A decrease in transfer payments
C)A decrease in the federal budget deficit
D)An increase in the federal budget surplus
E)A decrease in government purchases

Question

Quizplus · Accepted Answer

A decrease in taxes would increase disposable income and consumer spending, stimulating aggregate demand and job creation, which could help to reduce unemployment.

If Unemployment Is the Most Significant Problem in an Economy