If aggregate output is below the natural rate level,activists of policies would recommend that the government
A)do nothing.
B)try to eliminate the high unemployment by attempting to shift the aggregate supply curve to the right.
C)try to eliminate the high unemployment by attempting to shift the aggregate demand curve to the right.
D)try to eliminate the high unemployment by attempting to shift the aggregate demand curve to the left.

Question

Quizplus · Accepted Answer

Activists of policies would recommend that the government try to eliminate high unemployment by attempting to shift the aggregate demand curve to the right. By increasing government spending, lowering taxes, or implementing monetary policies, the aggregate demand curve will shift to the right, increasing output and reducing unemployment. Doing nothing (A) would not address the issue, and attempting to shift the aggregate supply curve to the right (B) may not be effective since the output is already below the natural rate level. Shifting the aggregate demand curve to the left (D) would worsen the problem of unemployment.

If Aggregate Output Is Below the Natural Rate Level,activists of Policies