Suppose the Economy Has a High Level of Unemployment and a Low

question 65

Multiple Choice

Suppose the economy has a high level of unemployment and a low level of aggregate output. Which of the following policies could the government implement to alleviate these conditions?

• A)a contractionary fiscal policy that increases tax rates
• B)an expansionary fiscal policy that increases tax rates
• C)a contractionary fiscal policy that increases government purchases
• D)automatic fiscal stabilizers
• E)an expansionary fiscal policy that increases government purchases

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Definitions:

Common Stock

Represents ownership shares in a corporation, giving shareholders voting rights and a claim on a portion of the company's profits through dividends.

Market Price

The market price is the current price at which an asset or service can be bought or sold in a open market.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, increasing the number of shares owned.

Par Common Stock

Common stock issued with a nominal value expressed in the corporate charter, which represents the stock's legal capital per share.