Although monetary policy cannot reduce the natural rate of unemployment, other types of government policies can.

Question

Quizplus · Accepted Answer

Monetary policy primarily influences inflation and short-term economic activity, but it cannot affect the natural rate of unemployment, which is determined by factors such as technology, education, and labor market policies. Fiscal policies and structural reforms, on the other hand, can impact the natural rate of unemployment by improving labor market efficiency, enhancing skills, and making the economy more competitive.

Although Monetary Policy Cannot Reduce the Natural Rate of Unemployment