Question

which of the following is the least likely influence the natural rate of unemployment a.monopolies is...

which of the following is the least likely influence the natural rate of unemployment

a.monopolies is the goods market

b.labor unions

c.payroll taxes

d.unemployment insurance benefits

e. monetaryy policy

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Answer #1

Ans. Option e

A change in monetary policy leads to change in inflation only and no change in unemployment. This is goven by the quantity theory of money which explains that any increase/decrease in money supply increases/decreases the inflation rate and has no affect on any real variable like unemployment rate or GDP in long run. This is called classical dichotomy. In long run, both output and unemployment rate is a natural level.

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