An economy is experiencing a persistent slowdown in its long-run trend rate of economic growth alongside a significant rise in cyclical unemployment.
Which one of the following policy combinations is likely to be most effective in addressing both of these macroeconomic problems simultaneously?
A contractionary monetary policy and a contractionary fiscal policy
An expansionary fiscal policy and supply-side policies
A contractionary fiscal policy and supply-side policies
An expansionary monetary policy and a contractionary fiscal policy
