When people become unemployed because of a higher minimum wage, this type of unemployment is called
A) frictional.
B) structural.
C) cyclical.
D) abnormal.

Question

Quizplus · Accepted Answer

Structural unemployment occurs when the structure of the economy changes, such as when technology advances or consumer demand shifts. A higher minimum wage can cause businesses to lay off employees or not hire new ones, leading to structural unemployment for those affected. Frictional unemployment refers to the temporary unemployment that occurs when people search for new jobs, while cyclical unemployment occurs due to fluctuations in the economy. Abnormal unemployment is not a commonly used term in economics.

When People Become Unemployed Because of a Higher Minimum Wage