ACCA Applied Knowledge · Business and Technology · Macroeconomic factors
A government wishes to reduce structural unemployment. Which policy is most directly aimed at this type of unemployment?
Funding retraining and relocation assistance targets structural unemployment most directly. The problem is a mismatch between workers' skills or location and available jobs, so supply-side measures improve occupational and geographical mobility. Demand-side stimulus like lower interest rates or tax cuts mainly addresses cyclical unemployment.
- ACutting interest rates to stimulate aggregate demand
- BFunding retraining programmes and relocation assistance for displaced workersCorrect
- CIncreasing government spending during a recession
- DReducing income tax to raise consumer spending
Explanation
Structural unemployment results from skills and location mismatches, so supply-side measures such as retraining and relocation help directly. The other options are demand-side measures, which suit cyclical unemployment and do not address the mismatch.
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