Question

Assume an economy is incurring unemployment. The effect of resolving this problem will be to:

A. move the level of actual output to the economy's production possibilities curve.
B. create a less equal distribution of income.
C. shift its production possibilities curve to the left.
D. shift its production possibilities curve to the right.

Answer 1

The correct answer is option A.

Step-by-step explanation:

Unemployment in the economy can be reduced by increasing the level of output. To produce more the firms or producers will need more inputs. So, an increase in the output will lead to an increase in the demand for workers.

As the labor demand curve shifts to the right, the number of workers employed will increase. In this way, unemployment can be reduced.