Consider a scenario where a country experiences a sudden technological advancement that automates many jobs. How might this affect the unemployment rate, and what could be a potential policy response?

• A. Unemployment may increase due to job displacement; a potential policy response could be retraining programs.
• B. Unemployment may decrease as new jobs are created; a potential policy response could be reducing taxes.
• C. Unemployment remains unchanged; a potential policy response could be increasing interest rates.
• D. Unemployment may increase; a potential policy response could be increasing tariffs on imported goods.

Answer: (A)