Question

Demand-side economic policies most effectively reduce A) cyclical unemployment. B) seasonal unemployment. Eliminate C) real wage unemployment. D) frictional unemployment.

Answer 1

The answer you are looking for is letter A.

Demand-side economic policies most effectively reduce cyclical unemployment.

These policies can only reduce cyclical unemployment, which occurs during a recession. Some economists consider that this can only last a short time and that the markets can clear of their own accord. However, this does not happen often in practice, since government intervention can shorten a recession and therefore reduce unemployment.