Fiscal policy to combat demand-deficient unemployment is an attempt to:

Question

Quizplus · Accepted Answer

Fiscal policy involves government spending and taxation to alter aggregate demand. In the case of demand-deficient unemployment, aggregate demand is too low to meet the full-employment level of output. Therefore, the solution is to increase aggregate demand, as stated in choice A, so that it intersects with aggregate supply at the full-employment level of output. This will create more job opportunities and reduce unemployment. Choices B and D do the opposite of what is needed, while choice C refers to monetary policy, which is a different tool for macroeconomic management.

Fiscal Policy to Combat Demand-Deficient Unemployment Is an Attempt To