When the Fed slows the rate of growth of the money supply to slow down the economy, the unemployment type that will be directly affected is the
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) natural rate of unemployment.

Question

Quizplus · Accepted Answer

When the Fed slows the rate of growth of the money supply, it reduces the amount of money in circulation in the economy, which slows down economic activity. This results in a decrease in demand for goods and services, which in turn leads to a decrease in production and employment. This type of unemployment is known as cyclical unemployment because it is caused by a downturn in the business cycle.

When the Fed Slows the Rate of Growth of the Money