Question

When the government injects money into the economy, consumers may have more disposable income, which may lead to a reduction in unemployment.

a) True
b) False

Answer 1

True. Government monetary injections through expansionary fiscal or monetary policies can stimulate the economy, increase consumer disposable income, and potentially reduce unemployment by boosting demand and encouraging businesses to hire.The correct option is a) True

Step-by-step explanation:

When the government injects money into the economy, for example through an expansionary fiscal policy such as lower taxes or increased government spending, or through an expansionary monetary policy like increasing the money supply and lowering interest rates, the aim is to stimulate economic activity.

This increase in economic activity can lead to an increase in consumer disposable income and may ultimately result in a reduction in unemployment.

This relationship is based on the idea that as consumers have more money to spend, demand for goods and services increases, which can prompt businesses to hire more workers to meet the increased demand. Therefore, the statement that the government injecting money into the economy may lead to a reduction in unemployment is True. The correct option is a) True