Which pair of policies is likely to reduce the natural rate of unemployment?
A) job training and employment subsidies
B) high minimum wages and generous unemployment benefits
C) job training and higher minimum wages
D) employment subsidies and policies designed to strengthen labour unions

Question

Quizplus · Accepted Answer

Job training and employment subsidies can both increase the human capital of workers and incentivize businesses to hire more workers, both of which can reduce the natural rate of unemployment. Higher minimum wages and generous unemployment benefits, on the other hand, can increase the cost of hiring workers and decrease the incentive to work, potentially increasing the natural rate of unemployment. Policies designed to strengthen labor unions may also increase wages, but can also make it more difficult for businesses to hire workers, potentially increasing unemployment.

Which Pair of Policies Is Likely to Reduce the Natural