Outline how monetary policy’s blunt nature might limit its ability to reduce unemployment. 2 marks

Gap-fill exercise

  
Fill in all the gaps, then press "Check" to check your answers. Use the "Hint" button to get a free letter if an answer is giving you trouble.
This is because any reduction in interest rates can only help to reduce unemployment, as the lower interest rates stimulate demand for labour more generally and cannot target particular groups or types of unemployment, such as unemployment. This would require some other form of government intervention (e.g. via policy) that has the potential to improve the of those structurally unemployed – something a monetary policy stimulus is unable to achieve.