When the Fed increases the rate of growth of the money supply to jump start the economy, the unemployment type that will be directly affected is the
A) cyclical unemployment.
B) structural unemployment.
C) frictional unemployment.
D) natural rate of unemployment.

Question

Quizplus · Accepted Answer

When the Fed increases the rate of growth of the money supply to stimulate the economy, it leads to an increase in aggregate demand, which leads to an increase in output and employment. This rise in output and employment should, in theory, decrease cyclical unemployment, which is the type of unemployment caused by business cycle fluctuations.

When the Fed Increases the Rate of Growth of the Money