Suppose the economy has a high level of unemployment. This would imply

Suppose the economy has a high level of unemployment. This would imply

A) that the economy is operating on the SRAS curve and that government spending could be decreased to reduce unemployment.
B) that the government should engage in expansionary fiscal policy and increase the tax rate.
C) that fiscal policy has been ineffective and should be abandoned.
D) that the economy is operating to the left of the LRAS curve and that government spending could be increased to reduce unemployment.

ANSWER

D