Assume that the economy faces high unemployment but stable prices.Which combination of government policies is most likely to reduce unemployment?

Question

Quizplus · Accepted Answer

Lowering the key policy rate (which is the interest rate set by the central bank) will encourage borrowing and spending, leading to higher economic activity and job creation. Additionally, increasing government purchases will also stimulate demand for goods and services, which can lead to more jobs. The other options either do not address unemployment or may even exacerbate it by reducing demand for goods and services through higher taxes or lower government purchases.

Assume That the Economy Faces High Unemployment but Stable Prices