Final answer:
A government program that helps unemployed workers learn new skills and find jobs is likely to lower the natural rate of unemployment and, thereby, reduce the current level of unemployment, assuming inflation remains constant.
Step-by-step explanation:
The government program designed to help unemployed workers learn new skills, find new jobs, and relocate will likely lower the natural rate of unemployment. This is because such a program could enhance the match between the skills of the workforce and the needs of employers, as well as reduce geographical mismatches between workers and jobs. As a result, workers would be more employable and could transition between jobs more efficiently, which would decrease the time spent unemployed. This lower natural rate of unemployment will, in turn, decrease the current level of unemployment u, holding inflation and expected inflation fixed.
Government policies can significantly influence the natural rate of unemployment by affecting how eager people are to find work. If public policy provides a strong safety net during unemployment, there's less urgency to find a new job, potentially increasing the natural rate of unemployment. However, a program that enhances employability can have the opposite effect and lower the natural rate of unemployment.