1.A Rationale: Frictional unemployment occurs when there is difficulty in matching workers quickly with jobs. This means that frictional unemployment is temporary and short term and so statement 1 is true. A government can encourage labour mobility by offering individuals financial assistance with relocation expenses and by improving the flow of information on vacancies. This means that statement 2 is true.
2. A Rationale: Government policy on taxation, public spending and public borrowing relates to fiscal policy. Government policy on interest rates and exchange rates are part of the monetary policy.
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