What changes to fiscal and monetary policy might the government use to overcome unemployment? Explain how each action might affect the problem.
What will be an ideal response?
To overcome unemployment the government could lower taxes, increase government spending, lower interest rates, or increase the money supply. Lowering taxes, lowering interest rates, and increasing the money supply all help consumers and firms have more money to spend, so they will buy more goods and services, which means firms will need to hire more workers to produce them. An increase in government spending will have a similar effect EXCEPT that it will be the government who buys more goods and services.
You might also like to view...
If a monopolist's production process has economies of scale and average cost exceeds marginal cost, then
A) the government could set price equal to marginal cost and subsidize the monopoly. B) the government should not offer a subsidy, since the monopoly can make a profit setting price equal to marginal costs. C) if the government sets price equal to average cost, the monopoly will go out of business. D) the government cannot regulate price.
In order to maximize its profit in the short run, an airline should offer an additional flight whenever
a. its marginal revenue exceeds its sunk costs b. it marginal revenue exceeds its average total cost c. the average seat price exceeds its sunk costs d. the average seat price exceeds its average total cost e. the additional revenue exceeds the additional costs