The normal turnover of workers and the usual time it takes to find a satisfactory job causes
Unemployment to persist even at potential GDP.

Question

Quizplus · Accepted Answer

The persistence of unemployment due to the normal turnover of workers and the time it takes to find a suitable new job is known as frictional unemployment. This type of unemployment is inherent in any economy and is not a result of a cyclical downturn or inadequate aggregate demand (choice B). Frictional unemployment occurs because of the information gap between employers and job seekers and the time and effort it takes to match the right skills with the right job openings. Therefore, the best choice is C.

The Normal Turnover of Workers and the Usual Time It