Question

Which of the following policy combinations is most likely to lower the unemployment rate? Choice from the following options.

1. Decreasing taxes and buying government bonds in the open market
2. Increasing taxes and buying government bonds in the open market
3. Increasing government spending and selling government bonds in the open market
4. Decreasing both taxes and government spending

Answer 1

3. Increasing government spending and selling government bonds in the open market

Step-by-step explanation:

I will say option 3. Because I think the more government spending money, the more jobs there will be created, which will help lower the unemployment rate.

I don't think it is option 1, because we see in real life that even though tax decrease, the unemployment rate still increases during the pandemic.

I don't think increasing taxes in option 2 will help lower unemployment because it creates more issues for people.

I don't think it is option 4 because, let's say if the government spends more money on fixing the street, a lot of jobs will be created. But if government spending decrease, the jobs number will decrease too!

Answer 2

3

Step-by-step explanation:

Option 3 (increasing government spending and selling government bonds in the open market) is therefore the policy combination that is most likely to lower the unemployment rate.

Option 1 (decreasing taxes and buying government bonds in the open market) may also have a positive effect on the unemployment rate, as it involves both decreasing taxes and increasing government spending. However, buying government bonds in the open market may have a less direct impact on unemployment compared to increasing government spending through other means.

Option 2 (increasing taxes and buying government bonds in the open market) is unlikely to lower the unemployment rate, as increasing taxes can reduce consumer spending and economic activity, which can lead to job losses.

Option 4 (decreasing both taxes and government spending) is also unlikely to lower the unemployment rate, as both decreasing taxes and decreasing government spending can reduce economic activity and lead to job losses.