Bharti Singla
Senior Member
Which of the following is best suited for reducing the level of structural unemployment?
A. lowering the rate of interest
B. raising the rate of unemployment benefit
C. higher voluntary redundancy payments for workers in declining industries
D. more government funds for retraining of the unemployment
Correct answer is D. I understand the reasoning behind it. There was a question in past papers which explains : structural unemployment arises because of lack of skills needed for the job.
But, if I consider option A:
Lowering the rate of interest will lead to people saving less and consuming more, so aggregate demand will rise. As AD rises, production will rise so unemployment will reduce.
As the material suggests that 'structural unemployment is caused by either due to change in demand or change in production method'.
Could anyone please clarify?
A. lowering the rate of interest
B. raising the rate of unemployment benefit
C. higher voluntary redundancy payments for workers in declining industries
D. more government funds for retraining of the unemployment
Correct answer is D. I understand the reasoning behind it. There was a question in past papers which explains : structural unemployment arises because of lack of skills needed for the job.
But, if I consider option A:
Lowering the rate of interest will lead to people saving less and consuming more, so aggregate demand will rise. As AD rises, production will rise so unemployment will reduce.
As the material suggests that 'structural unemployment is caused by either due to change in demand or change in production method'.
Could anyone please clarify?