Question

Demand-side economic policies most effectively reduce A) cyclical unemployment. Eliminate B) seasonal unemployment. C) real wage unemployment. D) frictional unemployment.

Answer 1

Demand-side economic policies most effectively reduce cyclical unemployment

Answer: Option A

Explanation:

Cyclical unemployment is the type of unemployment where people do not get jobs and get unemployed during recession which is a part of the trade cycle therefore having the name cyclical unemployment.

When there is increase in the demand in the economy because of the policies which are demand sided, it leads to the reduction in unemployment by providing jobs and finishing period of recession and leading to growth of the economy going towards period of recovery and then boom.

Answer 2

Demand-side economic policies are used to stimulate the growth of demand for goods and services. The idea is if the people have more money they are going to spend it on goods and services. With more production demands more labor is in demand.  This type of economic policy would reduce A) cyclical unemployment. Since cyclical unemployment occurs when the market makes a downturn, cyclical unemployment will be reduced if there is a new demand for labor in the market.