Question

Which of the following policies would be advocated by someone who wants the government to follow an active stabilization policy when the economy is experiencing severe unemployment? Group of answer choices decrease the money supply increase government expenditures increase taxes all of the above are correct

Answer 1

supply increase government expenditures

Step-by-step explanation:

When there is unemployment, the active stabilisation policy of the government would be to increase money supply. This is known am expansionary fiscal policy.

Money supply can be increased through an increase in government expenditure.

For example, if the government decides to increase money supply by building a road, labour and engineers would have to be employed to carry out the project, this would reduce unemployment.

The other options reduce money supply. They are known as contractionary fiscal policy.

I hope my answer helps you.