Unemployment normally arises when ________.

Question

Quizplus · Accepted Answer

Unemployment normally arises when wages are above the market-clearing wage level, meaning there is a surplus of labor supply compared to labor demand. This can occur due to various factors such as minimum wage laws, unionization, discrimination, or technological advancements that reduce the demand for certain types of labor. When wages are at or below the market-clearing wage level, there is no surplus of labor and therefore no unemployment. Labor markets are rarely frictionless, meaning there are often barriers to entry or mobility that can affect labor supply and demand, but this is not the main cause of unemployment.

Unemployment Normally Arises When ________