Reducing the duration of full employment insurance benefits

Increasing statutory minimum wages

Providing relocation subsidies to unemployed workers

None of the above policies would work to reduce frictional unemployment

M*

k

P

Y

k

Y

1/(kY)

kY

A: the money supply B: inflation

A: the money supply B: GDP growth

A: inflation B: GDP growth

A: inflation B: the effective exchange rate

that there has been a gain in the country’s competitiveness.

that absolute purchasing power parity has increased.

that it leads to arbitrage resulting in an appreciation of the real exchange rate in the future.

all of the above