Suppose the Target Rate of Unemployment Is 5 Percent but the Actual

question 40

Multiple Choice

Suppose the target rate of unemployment is 5 percent but the actual rate of unemployment is 4 percent. Given this information, which of the following policies is most appropriate according to the AS/AD model?

• A)A tax cut
• B)An increase in government spending
• C)A tax increase
• D)No change in taxes or government spending

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Definitions:

Narcolepsy

A condition where an individual experiences overwhelming sleepiness during the day and unexpected sleep episodes.

Sleeping Pill

A type of medication used to induce sleep or improve the quality of sleep in individuals with insomnia or other sleep disorders.

Insomnia

A sleep disorder where an individual has difficulty falling asleep, staying asleep, or experiences non-restorative sleep.

REM Sleep

A phase of sleep characterized by rapid eye movements, low muscle tone, and vivid dreams; associated with brain activity similar to wakefulness.