No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

Macroeconomic Performance (10 of 10)

Question 10:
Which of the following will most likely cause a decrease in the unemployment rate when the economy is in recession?

A.  An increase in the federal funds interest rate
B.  An increase in personal income taxes
C.  An increase in the international value of the dollar
D.  An increase in imports
E.  An increase in consumer expenditures

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Correct Answer: E, An increase in consumer expenditures. An increase in consumer spending, the largest component of GDP, will reduce unemployment. An increase in the value of the dollar will mean more imports and fewer exports, which reduces GDP.