9.3 Employment/unemployment

Assess the extent to which monetary policy can be used effectively to solve the problem of unemployment. [20]

Keynesians argue that increasing budget deficits will solve the problem of unemployment. Monetarists argue that supply side policies are more effective in reducing unemployment. Consider which view is more likely to be correct. [25]

Evaluate the policies available to a government to reduce the level of structural unemployment. [13]

Explain why an economy might be in equilibrium at less than a full employment level of output and critically evaluate alternative policy measures which might be used to move the economy to a full employment level of output. [25]