If the economy is experiencing unemployment, then the most appropriate government policy would be to:
A) shift the aggregate demand curve by using a tax increase coupled with spending cuts.
B) shift the aggregate demand curve by using a tax increase coupled with more spending.
C) shift the aggregate demand curve by using a tax cut coupled with spending cuts.
D) shift the aggregate demand curve by using a tax cut coupled with more spending.
E) shift the aggregate supply curve by using a tax cut coupled with spending cuts.

Question

Quizplus · Accepted Answer

When the economy is experiencing unemployment, the government should increase aggregate demand to encourage businesses to hire more workers. The most appropriate policy would be to use a combination of a tax cut and increased government spending, which would shift the aggregate demand curve to the right. This would stimulate economic growth and create more employment opportunities. Option D is the best choice as it suggests a tax cut coupled with more spending.

If the Economy Is Experiencing Unemployment, Then the Most Appropriate