Question : Which policy measures are generally used to reduce unemployment in an economy?
Option 1: Expansionary fiscal and monetary policies
Option 2: Contractionary fiscal and monetary policies
Option 3: Structural and supply-side policies
Option 4: None of the above
Correct Answer: Expansionary fiscal and monetary policies
Solution : The correct answer is (a) Expansionary fiscal and monetary policies
Expansionary fiscal policies involve increasing government spending and/or reducing taxes to stimulate economic activity and boost aggregate demand. This can lead to increased business investment, consumer spending, and overall economic growth, which can help create job opportunities and reduce unemployment.
Expansionary monetary policies involve actions by the central bank to lower interest rates and increase the money supply. Lower interest rates encourage borrowing and investment by businesses, which can lead to increased economic activity and job creation.
