When the automobile replaced horse- drawn carriages as the principal means of transportation, firms producing horse- drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing
A) cyclical unemployment.
B) structural unemployment.
C) frictional and cyclical unemployment.
D) frictional unemployment.

Question

Quizplus · Accepted Answer

The replacement of horse-drawn carriages with automobiles led to a permanent decline in demand for carriage production, causing the firms to shut down and permanently lay off their workers. This type of unemployment resulting from a shift in the structure of the economy is called structural unemployment.

When the Automobile Replaced Horse- Drawn Carriages as the Principal