If the Unemployment Rate Rises,which Policies Would Be Appropriate to Reduce

question 27

Multiple Choice

If the unemployment rate rises,which policies would be appropriate to reduce it?

• A)increase the money supply,increase taxes
• B)increase the money supply,cut taxes
• C)decrease the money supply,increase taxes
• D)decrease the money supply,cut taxes

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute away from more expensive goods toward cheaper ones.

Total Utility

The total satisfaction or benefit received by consuming a certain quantity of goods or services.

Utils

A hypothetical unit of measure used to quantify the satisfaction or utility that a consumer derives from consuming a good or service.

Marginal Utility per Dollar

The additional satisfaction or utility gained from consuming an additional unit of a good or service per unit of currency spent.