Sectoral changes create frictional unemployment because they involve the movement of workers from one industry to another. This can lead to temporary unemployment as workers search for new jobs in the new industry. Firms paying wages above equilibrium to attract a better pool of candidates creates structural unemployment because it leads to a mismatch between the skills of the workers and the jobs available.

Solved

Sectoral Changes

Question 518

Multiple Choice

Sectoral changes

A) create frictional unemployment,while firms paying wages above equilibrium to attract a better pool of candidates creates structural unemployment.
B) create structural unemployment,while firms paying wages above equilibrium to attract a better pool of candidates creates frictional unemployment.
C) and firms paying wages above equilibrium to attract a better pool of candidates both create structural unemployment.
D) and firms paying wages above equilibrium to attract a better pool of candidates both create frictional unemployment.

Correct Answer: