If the economy is experiencing unemployment, then the most appropriate government policy would be to shift the aggregate:
A) demand curve by using a tax increase coupled with spending cuts.
B) demand curve by using a tax increase coupled with more spending.
C) demand curve by using a tax cut coupled with spending cuts.
D) demand curve by using a tax cut coupled with more spending.

Question

Quizplus · Accepted Answer

A tax cut would increase disposable income and encourage consumption, which would shift the aggregate demand curve to the right. Additionally, increased government spending would also increase aggregate demand. This combination of policies would help to reduce unemployment.

If the Economy Is Experiencing Unemployment, Then the Most Appropriate