From a macroeconomic perspective, policymakers can be most effective with policies that target cyclical unemployment.

Question

Quizplus · Accepted Answer

Cyclical unemployment is caused by changes in the business cycle, and therefore can be influenced by macroeconomic policies such as monetary and fiscal policy. Policies that stimulate economic growth and increase aggregate demand can help reduce cyclical unemployment. In contrast, structural and frictional unemployment are caused by factors that are outside the control of macroeconomic policies.

From a Macroeconomic Perspective, Policymakers Can Be Most Effective with Policies