Attempts:Score: /1 34. Chapter $3201x, Section.109, Problem 023 Which of the fol

Question

Attempts:Score: /1 34. Chapter $3201x, Section.109, Problem 023 Which of the following would reduce the natural rate of unemployment? 0 a. an increase in the rate of money growth but not increased unemployment compensation b. neither an increase in unemployment compensation nor an increase in the rate of money growth c. both an increase in the rate of money growth and increased unemployment compensation d. an increase in unemployment compensation but not an increase in the rate of money growth Save & Continue Continue without saving

Explanation / Answer

Correct option is (a).

As money grows at increased rate, money supply rises, increasing aggregate demand. As aggregate demand rises, natural rate of unemployment falls, provided unemployment compensation doesn't grow at the same rate.

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