Ask Question
25 June, 22:52

Suppose the target rate of unemployment is 5 percent but the actual rate of unemployment is 4 percent. Given this information, which of the following policies is most appropriate according to the AS/AD model?

A. A tax cut.

B. An increase in government spending.

C. A tax increase.

D. No change in taxes or government spending.

+1
Answers (2)
  1. 25 June, 23:07
    0
    The best answer is "C"

    "A tax increase"

    Explanation:

    The most appropriate according to the AS/AD model is to increase the tax and this is because the unemployment rate is beneath the target rate, output is most likely above potential, so a contractionary policy is most appropriate.
  2. 26 June, 00:27
    0
    C. A tax increase

    Explanation:

    Tax increase is an increase in the amount of tax that people and companies are obliged to pay

    In order to avoid high interest rates substantial tax increases would be needed.

    They are calling for large spending cuts and tax increases.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose the target rate of unemployment is 5 percent but the actual rate of unemployment is 4 percent. Given this information, which of the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers