Which of the following types of unemployment is likely to exist in an economy that is at its potential output level?
A)Cyclical unemployment only
B)Structural unemployment only
C)Frictional,cyclical,and seasonal unemployment only
D)Frictional,seasonal,and structural unemployment only
E)Seasonal unemployment only

Question

Quizplus · Accepted Answer

When an economy is at its potential output level, it means that it is producing at maximum efficiency and there are no spare resources. Hence, cyclical unemployment is not likely to exist. However, frictional, seasonal, and structural unemployment can exist even at potential output level. Therefore, option D is the best answer as it includes all three types of unemployment that can exist in an economy at potential output.

Which of the Following Types of Unemployment Is Likely to Exist