When mismatch unemployment characterizes an economy

Question

Quizplus · Accepted Answer

When mismatch unemployment characterizes an economy, it means that there are job openings available in some sectors/industries, but the unemployed do not possess the skills required for those job vacancies. In such a situation, monetary and fiscal policies to raise aggregate demand (AD) would not be effective as they would not address the core issue of skill mismatch. Instead, appropriate education and training programs that target skill development or targeted fiscal policies that incentivize workers to acquire specific skills would be more effective in reducing mismatch unemployment. Therefore, monetary and fiscal policies to raise AD are not the appropriate government action in this situation.

When Mismatch Unemployment Characterizes an Economy