What are the answer and explanation for this question I am s

What are the answer and explanation for this question? I am swaying between A and B.

Which of the following is true if cyclical unemployment is high?

A. Velocity is low.

B. Monetary policy has little effect on the price level.

C. The marginal propensity to consume will be particularly high.

D. The country ’s currency has a low value in foreign exchange markets.

E. The Fed could bring the economy back toward full employment by selling bonds on the open market.

Solution

A. Velocity is low During cyclical unemployment, there is a downfall in economic activity. Less and less goods are produced due to fall in aggregate demand. When production is reduced, less people are employed and unemployment increases. With decrease in income, people decrease their spending and it leads to decrease in velocity of money.