Unemployment will exist in a market clearing model, if it takes some search time for workers to find jobs.

Name: Unemployment will exist in a market clearing model, if it takes some search time for workers to find jobs.
Brand: Quizplus
Rating: 4.7 (37 reviews)

Question

Quizplus · Accepted Answer

In a market clearing model, all labor supply should be matched by labor demand. However, if there is a time delay in the matching process (i.e. search time for workers to find jobs), then there will be temporary unemployment. This is known as frictional unemployment.

Unemployment Will Exist in a Market Clearing Model, If It