Assume the Economy Faces High Unemployment but Stable Prices

Multiple Choice

Assume the economy faces high unemployment but stable prices. Which combination of government policies is most likely to reduce unemployment?

A) the purchase of government securities in the open market and an increase in taxes
B) the sale of government securities in the open market and a decrease in taxes
C) the sale of government securities in the open market and a decrease in government spending
D) the purchase of government securities in the open market and an increase in government spending