Final answer:
It is false to say that increasing government spending to reduce unemployment is an example of laissez-faire economics. Laissez-faire advocates for minimal government intervention, while increasing government spending is a form of discretionary fiscal policy intended to stimulate the economy and reduce unemployment.
Step-by-step explanation:
The statement that the government increasing government spending in hopes of reducing unemployment is an example of laissez-faire economics is false. Laissez-faire economics advocates for a minimal role of the government in the economy, favoring private markets to operate with little to no government intervention. In contrast, increasing government spending to reduce unemployment is a form of discretionary fiscal policy, which is an interventionist approach. This policy is employed to stimulate the economy, particularly during a recession, by attempting to increase aggregate demand through higher government spending or tax cuts.
Neoclassical economists believe in the market's ability to self-correct and suggest that the government does not need to intervene much in terms of unemployment. They argue that any intervention can lead to market distortions and believe that economic challenges like unemployment will balance out in the long run if the market is left to operate freely. However, the government often uses tools like unemployment insurance, fiscal stimulus packages, and adjustments to tax and spending levels as automatic stabilizers and discretionary policies to manage the economy's cyclical nature and address concerns such as high unemployment in the short term.