6
QuizMultiple Choice

Economic Policy — Quiz

Question 6 • Personal Finance and Economics

Country Q has experienced a rapid increase in its unemployment rate and a sharp decline in its GDP. What might policymakers do in the face of these economic indicators?

Answer
A
encourage a decrease in purchasing until employment figures increase
B
increase taxes so the government has more money to spend
C
try to trade with other nations to increase production and create new jobs
D
implement controls on wages, forcing employers to pay higher wages

Explanation

Rising unemployment and falling GDP indicate an economic downturn, so policymakers may try to increase production and employment. Expanding trade can create demand for domestic goods and services, supporting businesses and potentially creating jobs. Choice A would further reduce spending, while raising taxes as in C could weaken demand rather than directly address the downturn.

AI-written and checked against the verified answer.

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