Government policy to reduce unemployment and increase national output can be illustrated by an
A)outward shift of the aggregate demand curve caused by an increase in government spending.
B)outward shift of the aggregate supply curve caused by a reduction in government spending.
C)inward shift of the aggregate demand curve caused by an increase in government spending.
D)inward shift of the aggregate supply curve caused by a reduction in government spending.

Question

Quizplus · Accepted Answer

Increasing government spending will increase the aggregate demand in the economy, leading to an outward shift of the aggregate demand curve. This will result in an increase in output and employment in the short run. A reduction in government spending would lead to a contraction of aggregate demand and a potential decrease in national output and employment.

Government Policy to Reduce Unemployment and Increase National Output Can