ACCA Applied Knowledge · Business and Technology · Macroeconomic factors
A government wants to reduce structural unemployment caused by a mismatch between workers' skills and available jobs. Which policy is most appropriate?
Funding retraining programmes and improving labour mobility is most appropriate. Structural unemployment arises from mismatches between workers' skills or locations and available jobs, so supply-side measures tackle the cause. Demand stimulus suits cyclical unemployment, and tariffs address trade balances rather than skills gaps.
- AIncreasing the money supply through lower interest rates
- BFunding retraining programmes and improving labour mobilityCorrect
- CRaising import tariffs to cut the trade deficit
Explanation
Structural unemployment results from skills or location mismatches, so supply-side measures such as retraining and mobility help directly. Demand stimulus through lower rates addresses demand-deficient unemployment, and tariffs target the trade balance, not skills mismatch.
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