Unemployment increases when
A)an inflationary gap is created.
B)potential GDP increases.
C)the government decreases its expenditure on goods and services.
D)aggregate demand increases.
E)aggregate supply increases.

Question

Quizplus · Accepted Answer

When the government decreases its expenditure on goods and services, this can lead to a decrease in aggregate demand, which can result in a decrease in economic activity and higher unemployment.

Unemployment Increases When